Tatung: Lin Family Ousted in Third Generation, Outsiders Win Control (Chinese)

This case explores the downfall of a century-old family-owned and managed firm in Taiwan called Tatung. It follows its history from a construction company firm with large land holdings in Northern Taiwan to one of the most well-known makers of electronic appliances. The founder, Shang-Zhi Lin, was a visionary, and from the end of WW1 to the end of WW2 built a solid manufacturing company and established an educational institute to train the company’s engineers. His son, TS Lin, transformed Tatung during the post-WW2 boom into a conglomerate, helping forge Taiwan as an economic powerhouse. It was one of the first Taiwanese companies to be listed on the stock exchange. However, Tatung’s fortunes dimmed in the third generation as corruption went unchecked, leading to disgrace and the company’s demise.

The case offers an opportunity to discuss the problems facing family firms when owner-managers fail to groom their successors. In this event, the third-generation descendant, who was the then CEO of Tatung, was convicted of a serious financial crime and sentenced to prison. It also allows instructors to focus on governance issues at the level of the board, when activist investors thwart the legacy managers’ control and win a majority of the seats. Overall, the case gives instructors a chance to discuss a well-known company that continues its business activities in Taiwan.