1) With your observations and research about family corporations, please comment on how corporations face challenges over leadership transitions and sustaining in the market. (Write less than 500 words)
Leadership transitions and sustaining is an important and challenging issue in most corporations, especially the family corporations. Quite a numbers of founders, who are also the first generation of the corporations, set up their business in a small scale, and walking through the period of expansion in the business cycle, they run their business well and thus the scale become larger. During this period, the business was mostly operated under the help of the family of the founder, like his wife, sons, daughters, or even son-in-law or daughter-in-law. As years passed, the founder need to think of the ways of passing the business to the next generation. Before that, there are a few obstacles that is necessarily to be stepped across.
The first obstacle would be arose from the individual aspect: the willingness and capabilities of the inheritors. Growing up in the family with sufficient resources, the second generation is usually educated to inherit the family business, despite the willingness of his or her interest. This phenomenon generates from the sense of traditional Chinese that the family business has to be inherited by the sons (mostly) or daughters. It is quite common that “Chinese founders would want their offspring to stay together and lead the businesses they have founded. However, this is often “wishful thinking” as family members… they often want to sell the business and move on” (Fan 2012a). The willingness of inheritors will make a company sustain or fall down.
The second obstacle would be the misunderstanding between the generations. As described previously, the second generation enjoys a better environment than the first generation. Some of them are able to study overseas. After they graduate and return back to HK, as when they are going to put what they learnt into practice, misunderstanding may arise at this moment. Different perceptions and values between father and son is another cause of conflict (Levinson 1971; Handler 1990). The old style management tends to be more prudence but the new style of management tends to be more aggressive and thus there maybe argument rises up during the two generations.
The third obstacle would be the disputes among the family members. As described before, the business is set up by the founder but run with the help of family members, after the founder passed away, other members would fight for more control on the corporation. For example, in the Yung Kee case, the elder son and the younger one gathers the shares of Yung Kee in order to gain more control on the business but originally, the Kam Senior did distribute the shares equally but at last, the younger sons gathers 55% of Yung Kee’s business share and gain control on it. And before the application of wound up to the court by the elder son, there are a lot of arguments arise, including the arguments on the ‘face’ and the ‘renqing’, between the two parties of elder son and the younger son.
2) We have learnt most family corporations will have their life stage in development over the years (theories of Prof. Wong Siu Lun in family capitalism since 1982). In general, other than the human factors (eg: family relationships in conflict, generations gap, probate in disputes...etc.) those we have discussed in class or heard over the lectures during Academic Week. What else could be the causes in the eyes of corporate governance, may affect corporations pass on their leadership? (Please illustrate with examples if possible.) (Write less than 500 words)
The charismatic leadership is quite an important factor for the family business succession. Take Yung Kee as an example, Kam Senior has set up the business by himself from a street food stall to a famous restaurants. The reason for the growth of the business can honored to Kam Senior’s charismatic leadership. In Chinese style management, we can refer to 3 characteristics of Kam Senior that make Yung Kee famous, which are competence, work attitude and interpersonal relationship. For the competence, said in Yu and Kwan’s research, “He (Kam Senior) built up the capabilities of Yung Kee which was renowned a brand name of Hong Kong and worldwide reputation, with the basis of a few years of education and solely operation.” Here, we can see the charismatic leadership is build up not by bluffing, but doing the real and right things. Second, “The staff respected for his (Kam Senior) work attitude.” making the staff members admiring can actually make the business operates more softly. Thirdly, “He (Kam Senior) treated all employees like his family members and looked after their welfare including livelihood, sickness and death (quoted in Kam 2002:8).” These 3 factors make a charismatic leader. In the succession of the business, the charismatic leadership may be lost due to the shift of the leaders. People are denying the leaders with no charismatic leadership but admiring the one with it. Thus the central force of the first generation, who is the founder, becomes the diversified force of second generation (the inheritors). This makes the sucession harder.

Reference
1. Fu-Lai, Tony, Y., & Diana S., K. (n.d.). Family Business Succession in Hong Kong: The Case of Yung Kee.