SUCCESS KEYS TO CREATING THIRD- GENERATION ACHIEVEMENT: A CASE STUDY IN FAMILY BUSINESS IN INDONESIA
International Journal of Civil Engineering and Technology (IJCIET)
Volume 8, Issue 11, November 2017, pp. 803–810, Article ID: IJCIET_08_11_082
Available online at http://http://www.iaeme.com/ijciet/issues.asp?JType=IJCIET&VType=8&IType=11
ISSN Print: 0976-6308 and ISSN Online: 0976-6316
© IAEME Publication
Scopus Indexed
SUCCESS KEYS TO CREATING THIRDGENERATION ACHIEVEMENT: A CASE STUDY
IN FAMILY BUSINESS IN INDONESIA
Istiatin and Luhgiatno
Universitas Islam Batik Surakarta, Surakarta, Indonesia
ABSTRACT
This research aims at finding the characteristics of third-generation successors
which can create some achievement by applying transformations, be it stucture,
technology or people transformation. This research uses qualitative research design:
Such a type of research produces and processes descriptive data. The data in this
research are collected using in-depth interview with informants. The research results
indicate that currently PT Danliris has performed succession by determining the
characteristics of good successors, family transformation and harmonization. For this
time being, PT Danliris is led by their third-generation leader, who successfully attain
some achievement.
Key words: Family company, characteristics of successor, transformation, successor
achievement.
Cite this Article: Istiatin and Luhgiatno, Success Keys to Creating Third-Generation
Achievement: A Case Study in Family Business in Indonesia. International Journal of
Civil Engineering and Technology, 8(11), 2017, pp. 803–810.
http://www.iaeme.com/IJCIET/issues.asp?JType=IJCIET&VType=8&IType=11
1. INTRODUCTION
Family businesses contribute significantly to a country’s economic development and growth
[1]. Most large companies developed throughout the world currently always begin as family
businesses. Family businesses are a company where its leadership and ownership are
concentrated on a family [2]. To run a family business is extremely hard. What underlies the
more complex issues in a family company than in other organization is that in a family
company there are two different things which are equally important for the company’s
survival, i.e. business and family interests [3]. In addition to the issue of harmony between
business and family goals, several issues specifically coherent to family companies, they are
conflict of values, succession, organizational structure, competence, compensation and
distribution of revenues. Samara and Arenas [4] explain that fairness has been an important
issue in a family business. Family companies should set themselves free from various
problems and focus on improving and maintaining their performance and existence, from one
generation to another with longer age.
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Success Keys to Creating Third-Generation Achievement: A Case Study in Family Business in
Indonesia
The greatest problem of family businesses is the transfer of leadership from one
generation to the next one. This problem is not specific to Indonesia only [5], rather it also
happens in many countries throughout the world, such as England [6], Greece [7, 8], China
[9], Poland [10], the Philippines [11], and other countries. Earlier generations want the family
business to have longer age [12]. Previous generations try their best to maintain, develop and
support their children and other members of the family to be able to succeed the leadership
[13]. The family also desires to maintain, develop, and support their children and other
members of them as well as their career goals. However, the process of transfer from the older
to the newer generations has never been an easy process. Many cases show how the newer
generation fails to run the family business well, leading the family businesses to their end in
the newer generation’s hands. Ward [14] explains that only 30% of family companies survive
in the second generation’s administrations and only 10-15% in the third generation’s hands.
This research aims at finding the characteristics of third-generation successors which can
create some achievement by applying transformation, be it stucture, technology and people
transformation.
2. LITERATURE REVIEW
2.1. Family Business
Many literatures explain what family company is. Cano-Rubio, Fuentes-Lombardo [15]
suggest that many approaches are available to explain what family business is. Chua,
Chrisman [16] defines family business as the one controlled by a family. Family company is a
company where a family becomes the holders of most of its shares and assumes some of the
management positions and the offsprings of this family are expected to follow their step [17].
Lee-Chua [18] and Piva, Rossi-Lamastra [19] explain that the family’s portion in controlling
the business is 50%. Family company can cosist of large, family-controlled public companies,
where the ownership focus and/or management control lie in the hands of a certain family or a
group of families [20]. Another definition says that a family company is an organization the
operating decision and the plan for main leadership succession of which are influenced by
members of a family [21].
The recent challenge of family company is how to make to keep their business growing
and developing. According to Huang, Lo [22] when a company gets bigger or increases in
size, the next challenge is how to transform a family business into a professional business. An
organization’s environment keeps changing, thus it should be able to adapt with these changes
to survive. One of the most important duties of a leader is to discover the factors in his/her
organization’s environment which can have some impacts on the organization’s survival, as
well as identifying these factors’ nature. This is because when a leader is slow at following it
up, the organization would be left behind its competitors and it can pose danger to the
organization’s effectiveness and survival.
2.2. Succession in Family Business
The key to family business’s success and longevity lie in the effective succession [1].
Succession can be defined as an action and activity which assign leadership from one member
of a family to another member of that family [23]. Founders expect their children to
successfully succeed their family businesses [7]. Poza [24] explains that to be a successful
successor in a family company, the successor needs to be competent, understand well the
dimensions of a company’s business and dimensions of family. A successful successor will be
able to manage the company and employees optimally.
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The success in doing succession can have different meanings. The succession process
should be followed by many parties, such as founders, successors, big families, non-family
employees, even customers and suppliers [5]. The succession process should be supported by
all parties in order for it to generate a successor with excellent performance who performs all
of his/her duties in the company fully responsibly and focuses on the future of the family
business which results in the company’s longevity. Lansberg [25] emphasizes the importance
of succession process in whether or not a leadership succession in a family business would be
successful. In the Philippines, the success of a succession in a family business does not lie in
the succession planning, rather it lies in the owner’s consistency to keep sharing business
values to the successor [11]. Lambercht and Donckels [26] explain that a succession process
is a lengthy one, where succession planning becomes a part of this process. Hutcheson [27]
suggest that a whether a succession would be successful or not depends on three things,
namely shared power, balance between job and game, and succession planning process.
Poza [24] suggests that a successful successor has several characteristics. These
characteristics. The first characteristic is they understand the business well. Ideally, they
should like or even love the business nature itself. Secondly, they understand about
themselves, both their own weaknesses and strengths, thanks to the adequate education and
experience they have from the outside. Thirdly, they want to lead and to serve at the same
time. Fourthly, they are directed responsibly by the previous generations, by advisors, and by
the board of directors from the outside. Fifthly, they have a good relationship with the family,
and the ability to accommodate others, particularly with the heir team (siblings or cousins).
Sixthly, they can use non-family, competent managers in the top management team to
complement the abilities they already own. Seventhly, they have ownership or can lead
through partners. Eightly, they are respected by non-family employees, supplier, customer and
other members of the family. Ninthly, their ability and expertise match the strategic needs of
the business. Finally, they respect the past and they focus their energy on the family
business’s future.
3. RESEARCH METHODOLOGY
3.1. Research Design
Case study is used in this research. This study uses qualitative research design. Among
qualitative methods, case study plays a very important role, because it is one of the most-used
qualitative methods to study an organization [28]. Using a case study, this research can
investigate a little bit deeper into real phenomena [29, 30]. The case study in this research is
an explanatory case study, in which this study tries to understand how a phenomenon occurs
[31]. This study tries to understand how a family business can give some achievements up to
the third generation.
The data are collected using observation and in-depth interview. The participants in this
research are mentors who have worked for at least 30 years in the family company PT.
Danliris. In the qualitative data analysis technique, what the researchers do are: selecting data,
reducing data and drawing conclusion(s). The data validity test in this research uses
triangulation. From some kinds of triangulation, this research uses source triangulation where
the data obtained from interview with several research informants are cross-checked against
the data obtained from other informants.
4. RESULT AND DISCUSSION
A family business’s longevity is what is particularly desired by every family business and
they are willing to reach it by any means necessary [32]. However, it depends highly on its
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Success Keys to Creating Third-Generation Achievement: A Case Study in Family Business in
Indonesia
life cycle as determined by dynamic between generations [33]. A family company’s life cycle
according to Adizes (1989) consists of several phases. Firstly, the start up of a family
company begins with close-circle family or immediate family of the founders. Then, when the
company begins to grow and develop (growth), they will involve or introduce the second
generation (extended family) into the business and this is called the the dynasty of family era.
When the family company successfully survive, it will experience the professional influx
phase, i.e. the introduction of professional resources. Furthermore, when a family business
will reach its maturity and has been established, professionals will help manage the company.
When this phase is successfully attained, the company’s competitiveness will have been
proven and the myth that a family company can only last for three generations will be broken.
Every family business is surely expected to last for so long and to have a long-term business
continuance (longevity) [32]. The current challenge of a family company is how to make its
business growing and developing. According to Huang, Lo [22] when a company gets bigger
or increases in size, the next challenge is how to transform a family business into a
professional business. An organization’s environment keeps changing, thus it should be able
to adapt with these changes to survive. One of the most important duties of a leader is to
discover the factors in his/her organization’s environment which can have some impacts on
the organization’s survival, as well as identifying these factors’ nature. This is because when a
leader is slow at following it up, the organization would be left behind its competitors and it
can pose danger to the organization’s effectiveness and survival.
PT. Danliris, is a family company located in Banaran Sub-district, Grogol District,
Sukoharjo Regency. This company was established in 1920. The first generation (Mr. Kosam
Tjokrosaputro) began the business as a home-based business selling batik products. The
business developed rapidly and innovative. Innovation is important part in busineness [3436], especially in Batik Industri. In 1971, Mr. Kosam Tjokrosaputro merged all of his
businesses and name the merged enterprise PT. Batik Keris. After Mr. Kosam Tjokrosaputro
transfer the leadership to his children (Handoko and Handiman Tjokrosaputro). The family
business then developed even more rapidly. The family business developed into a textile
industry. Finally, the family agreed to establish a new company named PT Danliris.
Right now, the leadership has been transferred to their 3rd generation, they are Handoko
and Handiman Tjokrosaputro. PT. Danliris is a family company producing printed batik
products which has been managed by their third generation, established for 42 years with its
own dynamics which it has been successfully overcoming until recently, something which
shows a great development from the perspectives of both its performance and information
from the media, as well as the fluctuation it experiences, making it look more robust now
(SWA, 2015). Their human resources development indicates some improvement both
quantitatively and qualitatively, as can be seen from the time PT Danliris was managed by
Mister Tjokro Saputro, then succeeded by Mister Handiman Tjokrosaputro and now assigned
to Mister Tjokro granddaughter named Michelle Tjokrosaputro (SWA, 2015). From the first
generation, follpwed by the second and third generations, PT Danliris shows a highly
significant change, leading to its increasing popularity in the society at both local, regional
and national levels.
In this research, two things have been identified as the key to the third generation’s
success in leading a family business, namely the successor characteristics, transformation, and
family harmony.
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4.1.Successor Characteristics
Informants 1 and 2 say that Michelle Tjokrosaputro has the successor characteristics as
suggested by Alcorn who proposes 3 indicators to determine the criteria of a good successor (
Alcorn, 1982), namely:
4.1.1. Having Interest and Participation
At the beginning, Michelle Tjokrosaputro (3rd generation) did not want to succeed the
leadership in PT. Danliris. However, since her father frequently suffered from illness, she had
no choice but to take the leadership in the family business. To help her father, Michelle
Tjokrosaputro worked hard to improve the family business. In her way of developing the
family business, Michelle Tjokrosaputro experienced a time when the family business almost
collapsed. In 2005, the company encountered great problem and it was almost declared
insolvent. Michelle Tjokrosaputro did her best to develop the business until PT Danliris could
develop rapidly until recently.
From the interview with 2 respondents (Marinos) it is found that Michelle as its third
generation has great interest in running the company’s business, as can be seen in her
creativity in developing the family company by opening garment industry, varying her printed
batik method and motif. Additionally, this successor gives ideas about the company
development and participates extensively in creating achievements for the family company.
4.1.2. Good at Adapting
Through an interview with respondents 1 (Horison) and 2 (Marino), it is found that Mister
Tjokro (PT. Danliris founder) has introduced the company’s environment to his children,
including Mister Handiman (Mister Tjokro’s son), Michel’s father who was a habit of
bringing his children to the factory when they were off from school to see how their father
works and to introduce them with the employees who were still working, hence Michelle (the
third generation) was not someone new to the company’s environment. It means that her
character in business realm has been shapped early. Mister Handiman also implanted the
family values in the company to prevent them from disappearing in the next generation. After
Mister Handiman passed away, it was then Michelle’s turn to take over from her father the
control over the company and she did not feel awkward and could adapt herself to the
company's environment. Thanks to this PT. Danliris could exist until now. In addition, both
respondents 1 and 2 say that Michelle is someone who is understanding to her subordinates.
She never says she is the boss, rather she says that her bosses are those employees who work
responsibly because they are the reason behind the achievements reached by the company.
4.1.3. Having Vision in the Company’s Longevity
Based on the interview with respondents 1 and 2, it is found that the successor has a strong
vision to keep the family company last for long as embodied in the activities held to create
achievements, both the business achievement and family harmony. Visi to an organization
is highly important since it reflects how the company is directed towards some
continuance.
4.2. Transformation
It should be noted that companies should go through change or transformation process. Yet, to
change is never easy. Additionally whether it is realized or not, every change always creates
conflicts. There will always be those who think no changes are necessary, or those who have
been comfortable with the current condition, with the recently applicable ways, paradigm,
behaviors. Some others even fail to understand why do they have to change? Changes have
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Success Keys to Creating Third-Generation Achievement: A Case Study in Family Business in
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also been made by PT Danliris, they have transformed both their structure, technology and
human resources.
4.2.1. Structure
The interview with respondent 2 (Marino) indicates that Michelle, who is the third successor,
has made many changes, particularly in regard to the company strategy which has to be
implemented in the effort of creating the company’s achievement. The structure change is
intended merely to let the fresh air blow to human resources, with some adjustment to the
competence they have based on the jobs they are responsible for, hence the company will
receive some benefits.
4.2.3. Technology
PT. Danliris, according to the respondents, has made changes in technology. She replaces the
old printing machines used during her father’s reign with the far more sophisticated ones. All
equipment has prioritized computerization. All employees are sent to attend the
computerization training program.
4.2.4. Human resources (People)
Both respondents 1 and 2 suggest that ever since it is held by their 3rd generation, PT. Danliris
has made changes. Those who used to have little or no competence should now have some
competence. The human resources they have are professional people, not being dependent on
family, hence the third generation’s performance of PT. Danliris gets better and achieve better
in both business and family harmony. They also revise their salary and bonus system. It has
been Michelle’s commitment to give a good reward to any employee who performs well. She
even acknowledges that PT Danliris’s success is the fruit of all of the TEAM’s hard work.
4.3. Family Harmony
The interview with respondents 1 and 2 shows that Michelle (Third generation) craves for
harmony. To everyone, either family or non-family, involved to work for PT. Danliris she
prioritize the harmony and transparency aspect. She does so in order to prevent any conflict
from occuring and to create comfortable atmosphere to work in order to enable the company
to reach some achievements.
4.4. Business Achievement
The informants say that since Michelle Tjokro Saputro (3rd generation) takes over PT
Danliris, the trust from many parties gets even more visible. Every employee gives good
response since the successor has proven that she can operate the company by referring to the
expansion made this 3rd generation, opening boutique and also garment manufacturers named
Bateeq under the flag of PT Efrata Retailindo. In 2014 PT Danliris’s turnover amounted to
IDR 1 trillion and was classified as category 1 (current liabilities). She also develops business
branches and is flexible in capturing the chances in the market. She delegates the authorities
to many parties in order to accelerate the business process.
5. CONCLUSIONS
This research aims at finding the characteristics of third-generation successors which can
create some achievement by applying transformation, be it stucture, technology and people
transformation. The research results show that currently PT Danliris has performed succession
by determining the good characteristics of successor, transformation and family
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Istiatin and Luhgiatno
harmonization. Recently, PT Danliris is led by their third generation leader, who successfully
reaches some achievement.
The managerial implications in this research are: firstly, it is suggested that PT. Danliris in
the future keep transferring the leadership between generations by maintaining the good
characteristics of successor; Secondly, PT. Danliris ought to maintain or even improve the
achievement they have reached; Thirdly, It is expected that the third-generation successor
could keep the family togetherness and harmony in PT. Danliris and keep it managed by
professionals, as they have been doing now.
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Volume 8, Issue 11, November 2017, pp. 803–810, Article ID: IJCIET_08_11_082
Available online at http://http://www.iaeme.com/ijciet/issues.asp?JType=IJCIET&VType=8&IType=11
ISSN Print: 0976-6308 and ISSN Online: 0976-6316
© IAEME Publication
Scopus Indexed
SUCCESS KEYS TO CREATING THIRDGENERATION ACHIEVEMENT: A CASE STUDY
IN FAMILY BUSINESS IN INDONESIA
Istiatin and Luhgiatno
Universitas Islam Batik Surakarta, Surakarta, Indonesia
ABSTRACT
This research aims at finding the characteristics of third-generation successors
which can create some achievement by applying transformations, be it stucture,
technology or people transformation. This research uses qualitative research design:
Such a type of research produces and processes descriptive data. The data in this
research are collected using in-depth interview with informants. The research results
indicate that currently PT Danliris has performed succession by determining the
characteristics of good successors, family transformation and harmonization. For this
time being, PT Danliris is led by their third-generation leader, who successfully attain
some achievement.
Key words: Family company, characteristics of successor, transformation, successor
achievement.
Cite this Article: Istiatin and Luhgiatno, Success Keys to Creating Third-Generation
Achievement: A Case Study in Family Business in Indonesia. International Journal of
Civil Engineering and Technology, 8(11), 2017, pp. 803–810.
http://www.iaeme.com/IJCIET/issues.asp?JType=IJCIET&VType=8&IType=11
1. INTRODUCTION
Family businesses contribute significantly to a country’s economic development and growth
[1]. Most large companies developed throughout the world currently always begin as family
businesses. Family businesses are a company where its leadership and ownership are
concentrated on a family [2]. To run a family business is extremely hard. What underlies the
more complex issues in a family company than in other organization is that in a family
company there are two different things which are equally important for the company’s
survival, i.e. business and family interests [3]. In addition to the issue of harmony between
business and family goals, several issues specifically coherent to family companies, they are
conflict of values, succession, organizational structure, competence, compensation and
distribution of revenues. Samara and Arenas [4] explain that fairness has been an important
issue in a family business. Family companies should set themselves free from various
problems and focus on improving and maintaining their performance and existence, from one
generation to another with longer age.
http://www.iaeme.com/IJCIET/index.asp
803
editor@iaeme.com
Success Keys to Creating Third-Generation Achievement: A Case Study in Family Business in
Indonesia
The greatest problem of family businesses is the transfer of leadership from one
generation to the next one. This problem is not specific to Indonesia only [5], rather it also
happens in many countries throughout the world, such as England [6], Greece [7, 8], China
[9], Poland [10], the Philippines [11], and other countries. Earlier generations want the family
business to have longer age [12]. Previous generations try their best to maintain, develop and
support their children and other members of the family to be able to succeed the leadership
[13]. The family also desires to maintain, develop, and support their children and other
members of them as well as their career goals. However, the process of transfer from the older
to the newer generations has never been an easy process. Many cases show how the newer
generation fails to run the family business well, leading the family businesses to their end in
the newer generation’s hands. Ward [14] explains that only 30% of family companies survive
in the second generation’s administrations and only 10-15% in the third generation’s hands.
This research aims at finding the characteristics of third-generation successors which can
create some achievement by applying transformation, be it stucture, technology and people
transformation.
2. LITERATURE REVIEW
2.1. Family Business
Many literatures explain what family company is. Cano-Rubio, Fuentes-Lombardo [15]
suggest that many approaches are available to explain what family business is. Chua,
Chrisman [16] defines family business as the one controlled by a family. Family company is a
company where a family becomes the holders of most of its shares and assumes some of the
management positions and the offsprings of this family are expected to follow their step [17].
Lee-Chua [18] and Piva, Rossi-Lamastra [19] explain that the family’s portion in controlling
the business is 50%. Family company can cosist of large, family-controlled public companies,
where the ownership focus and/or management control lie in the hands of a certain family or a
group of families [20]. Another definition says that a family company is an organization the
operating decision and the plan for main leadership succession of which are influenced by
members of a family [21].
The recent challenge of family company is how to make to keep their business growing
and developing. According to Huang, Lo [22] when a company gets bigger or increases in
size, the next challenge is how to transform a family business into a professional business. An
organization’s environment keeps changing, thus it should be able to adapt with these changes
to survive. One of the most important duties of a leader is to discover the factors in his/her
organization’s environment which can have some impacts on the organization’s survival, as
well as identifying these factors’ nature. This is because when a leader is slow at following it
up, the organization would be left behind its competitors and it can pose danger to the
organization’s effectiveness and survival.
2.2. Succession in Family Business
The key to family business’s success and longevity lie in the effective succession [1].
Succession can be defined as an action and activity which assign leadership from one member
of a family to another member of that family [23]. Founders expect their children to
successfully succeed their family businesses [7]. Poza [24] explains that to be a successful
successor in a family company, the successor needs to be competent, understand well the
dimensions of a company’s business and dimensions of family. A successful successor will be
able to manage the company and employees optimally.
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The success in doing succession can have different meanings. The succession process
should be followed by many parties, such as founders, successors, big families, non-family
employees, even customers and suppliers [5]. The succession process should be supported by
all parties in order for it to generate a successor with excellent performance who performs all
of his/her duties in the company fully responsibly and focuses on the future of the family
business which results in the company’s longevity. Lansberg [25] emphasizes the importance
of succession process in whether or not a leadership succession in a family business would be
successful. In the Philippines, the success of a succession in a family business does not lie in
the succession planning, rather it lies in the owner’s consistency to keep sharing business
values to the successor [11]. Lambercht and Donckels [26] explain that a succession process
is a lengthy one, where succession planning becomes a part of this process. Hutcheson [27]
suggest that a whether a succession would be successful or not depends on three things,
namely shared power, balance between job and game, and succession planning process.
Poza [24] suggests that a successful successor has several characteristics. These
characteristics. The first characteristic is they understand the business well. Ideally, they
should like or even love the business nature itself. Secondly, they understand about
themselves, both their own weaknesses and strengths, thanks to the adequate education and
experience they have from the outside. Thirdly, they want to lead and to serve at the same
time. Fourthly, they are directed responsibly by the previous generations, by advisors, and by
the board of directors from the outside. Fifthly, they have a good relationship with the family,
and the ability to accommodate others, particularly with the heir team (siblings or cousins).
Sixthly, they can use non-family, competent managers in the top management team to
complement the abilities they already own. Seventhly, they have ownership or can lead
through partners. Eightly, they are respected by non-family employees, supplier, customer and
other members of the family. Ninthly, their ability and expertise match the strategic needs of
the business. Finally, they respect the past and they focus their energy on the family
business’s future.
3. RESEARCH METHODOLOGY
3.1. Research Design
Case study is used in this research. This study uses qualitative research design. Among
qualitative methods, case study plays a very important role, because it is one of the most-used
qualitative methods to study an organization [28]. Using a case study, this research can
investigate a little bit deeper into real phenomena [29, 30]. The case study in this research is
an explanatory case study, in which this study tries to understand how a phenomenon occurs
[31]. This study tries to understand how a family business can give some achievements up to
the third generation.
The data are collected using observation and in-depth interview. The participants in this
research are mentors who have worked for at least 30 years in the family company PT.
Danliris. In the qualitative data analysis technique, what the researchers do are: selecting data,
reducing data and drawing conclusion(s). The data validity test in this research uses
triangulation. From some kinds of triangulation, this research uses source triangulation where
the data obtained from interview with several research informants are cross-checked against
the data obtained from other informants.
4. RESULT AND DISCUSSION
A family business’s longevity is what is particularly desired by every family business and
they are willing to reach it by any means necessary [32]. However, it depends highly on its
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life cycle as determined by dynamic between generations [33]. A family company’s life cycle
according to Adizes (1989) consists of several phases. Firstly, the start up of a family
company begins with close-circle family or immediate family of the founders. Then, when the
company begins to grow and develop (growth), they will involve or introduce the second
generation (extended family) into the business and this is called the the dynasty of family era.
When the family company successfully survive, it will experience the professional influx
phase, i.e. the introduction of professional resources. Furthermore, when a family business
will reach its maturity and has been established, professionals will help manage the company.
When this phase is successfully attained, the company’s competitiveness will have been
proven and the myth that a family company can only last for three generations will be broken.
Every family business is surely expected to last for so long and to have a long-term business
continuance (longevity) [32]. The current challenge of a family company is how to make its
business growing and developing. According to Huang, Lo [22] when a company gets bigger
or increases in size, the next challenge is how to transform a family business into a
professional business. An organization’s environment keeps changing, thus it should be able
to adapt with these changes to survive. One of the most important duties of a leader is to
discover the factors in his/her organization’s environment which can have some impacts on
the organization’s survival, as well as identifying these factors’ nature. This is because when a
leader is slow at following it up, the organization would be left behind its competitors and it
can pose danger to the organization’s effectiveness and survival.
PT. Danliris, is a family company located in Banaran Sub-district, Grogol District,
Sukoharjo Regency. This company was established in 1920. The first generation (Mr. Kosam
Tjokrosaputro) began the business as a home-based business selling batik products. The
business developed rapidly and innovative. Innovation is important part in busineness [3436], especially in Batik Industri. In 1971, Mr. Kosam Tjokrosaputro merged all of his
businesses and name the merged enterprise PT. Batik Keris. After Mr. Kosam Tjokrosaputro
transfer the leadership to his children (Handoko and Handiman Tjokrosaputro). The family
business then developed even more rapidly. The family business developed into a textile
industry. Finally, the family agreed to establish a new company named PT Danliris.
Right now, the leadership has been transferred to their 3rd generation, they are Handoko
and Handiman Tjokrosaputro. PT. Danliris is a family company producing printed batik
products which has been managed by their third generation, established for 42 years with its
own dynamics which it has been successfully overcoming until recently, something which
shows a great development from the perspectives of both its performance and information
from the media, as well as the fluctuation it experiences, making it look more robust now
(SWA, 2015). Their human resources development indicates some improvement both
quantitatively and qualitatively, as can be seen from the time PT Danliris was managed by
Mister Tjokro Saputro, then succeeded by Mister Handiman Tjokrosaputro and now assigned
to Mister Tjokro granddaughter named Michelle Tjokrosaputro (SWA, 2015). From the first
generation, follpwed by the second and third generations, PT Danliris shows a highly
significant change, leading to its increasing popularity in the society at both local, regional
and national levels.
In this research, two things have been identified as the key to the third generation’s
success in leading a family business, namely the successor characteristics, transformation, and
family harmony.
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4.1.Successor Characteristics
Informants 1 and 2 say that Michelle Tjokrosaputro has the successor characteristics as
suggested by Alcorn who proposes 3 indicators to determine the criteria of a good successor (
Alcorn, 1982), namely:
4.1.1. Having Interest and Participation
At the beginning, Michelle Tjokrosaputro (3rd generation) did not want to succeed the
leadership in PT. Danliris. However, since her father frequently suffered from illness, she had
no choice but to take the leadership in the family business. To help her father, Michelle
Tjokrosaputro worked hard to improve the family business. In her way of developing the
family business, Michelle Tjokrosaputro experienced a time when the family business almost
collapsed. In 2005, the company encountered great problem and it was almost declared
insolvent. Michelle Tjokrosaputro did her best to develop the business until PT Danliris could
develop rapidly until recently.
From the interview with 2 respondents (Marinos) it is found that Michelle as its third
generation has great interest in running the company’s business, as can be seen in her
creativity in developing the family company by opening garment industry, varying her printed
batik method and motif. Additionally, this successor gives ideas about the company
development and participates extensively in creating achievements for the family company.
4.1.2. Good at Adapting
Through an interview with respondents 1 (Horison) and 2 (Marino), it is found that Mister
Tjokro (PT. Danliris founder) has introduced the company’s environment to his children,
including Mister Handiman (Mister Tjokro’s son), Michel’s father who was a habit of
bringing his children to the factory when they were off from school to see how their father
works and to introduce them with the employees who were still working, hence Michelle (the
third generation) was not someone new to the company’s environment. It means that her
character in business realm has been shapped early. Mister Handiman also implanted the
family values in the company to prevent them from disappearing in the next generation. After
Mister Handiman passed away, it was then Michelle’s turn to take over from her father the
control over the company and she did not feel awkward and could adapt herself to the
company's environment. Thanks to this PT. Danliris could exist until now. In addition, both
respondents 1 and 2 say that Michelle is someone who is understanding to her subordinates.
She never says she is the boss, rather she says that her bosses are those employees who work
responsibly because they are the reason behind the achievements reached by the company.
4.1.3. Having Vision in the Company’s Longevity
Based on the interview with respondents 1 and 2, it is found that the successor has a strong
vision to keep the family company last for long as embodied in the activities held to create
achievements, both the business achievement and family harmony. Visi to an organization
is highly important since it reflects how the company is directed towards some
continuance.
4.2. Transformation
It should be noted that companies should go through change or transformation process. Yet, to
change is never easy. Additionally whether it is realized or not, every change always creates
conflicts. There will always be those who think no changes are necessary, or those who have
been comfortable with the current condition, with the recently applicable ways, paradigm,
behaviors. Some others even fail to understand why do they have to change? Changes have
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also been made by PT Danliris, they have transformed both their structure, technology and
human resources.
4.2.1. Structure
The interview with respondent 2 (Marino) indicates that Michelle, who is the third successor,
has made many changes, particularly in regard to the company strategy which has to be
implemented in the effort of creating the company’s achievement. The structure change is
intended merely to let the fresh air blow to human resources, with some adjustment to the
competence they have based on the jobs they are responsible for, hence the company will
receive some benefits.
4.2.3. Technology
PT. Danliris, according to the respondents, has made changes in technology. She replaces the
old printing machines used during her father’s reign with the far more sophisticated ones. All
equipment has prioritized computerization. All employees are sent to attend the
computerization training program.
4.2.4. Human resources (People)
Both respondents 1 and 2 suggest that ever since it is held by their 3rd generation, PT. Danliris
has made changes. Those who used to have little or no competence should now have some
competence. The human resources they have are professional people, not being dependent on
family, hence the third generation’s performance of PT. Danliris gets better and achieve better
in both business and family harmony. They also revise their salary and bonus system. It has
been Michelle’s commitment to give a good reward to any employee who performs well. She
even acknowledges that PT Danliris’s success is the fruit of all of the TEAM’s hard work.
4.3. Family Harmony
The interview with respondents 1 and 2 shows that Michelle (Third generation) craves for
harmony. To everyone, either family or non-family, involved to work for PT. Danliris she
prioritize the harmony and transparency aspect. She does so in order to prevent any conflict
from occuring and to create comfortable atmosphere to work in order to enable the company
to reach some achievements.
4.4. Business Achievement
The informants say that since Michelle Tjokro Saputro (3rd generation) takes over PT
Danliris, the trust from many parties gets even more visible. Every employee gives good
response since the successor has proven that she can operate the company by referring to the
expansion made this 3rd generation, opening boutique and also garment manufacturers named
Bateeq under the flag of PT Efrata Retailindo. In 2014 PT Danliris’s turnover amounted to
IDR 1 trillion and was classified as category 1 (current liabilities). She also develops business
branches and is flexible in capturing the chances in the market. She delegates the authorities
to many parties in order to accelerate the business process.
5. CONCLUSIONS
This research aims at finding the characteristics of third-generation successors which can
create some achievement by applying transformation, be it stucture, technology and people
transformation. The research results show that currently PT Danliris has performed succession
by determining the good characteristics of successor, transformation and family
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harmonization. Recently, PT Danliris is led by their third generation leader, who successfully
reaches some achievement.
The managerial implications in this research are: firstly, it is suggested that PT. Danliris in
the future keep transferring the leadership between generations by maintaining the good
characteristics of successor; Secondly, PT. Danliris ought to maintain or even improve the
achievement they have reached; Thirdly, It is expected that the third-generation successor
could keep the family togetherness and harmony in PT. Danliris and keep it managed by
professionals, as they have been doing now.
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