TECO: Too Old to Rule or Too Young to Succeed

The case is an example of how a family can control a large conglomerate – TECO Electric & Machinery, a Taiwanese engineering business – yet with almost no ownership stake. Founded by five prominent business families in 1956, TECO has been run by Mao-Hsiung “Theodore” Huang for the past 50 years, the son in law of the former CEO and co-founder, who married into the dominant founding family and rose up the ranks. Theodore’s eldest son, Eugene, is impatient take over the reins. However, he makes a discovery just before the Annual General Meeting in 2021 and reaches the conclusion that at 83, his father simply does not want his son to take over the leadership, and will control the company from behind the scenes via non-family professionals he has installed in the executive suite. The case highlights a dilemma facing many Asian family-owned companies dominated by octogenarians who don’t know how to retire gracefully. It also addresses some of the ambiguities of bringing in non-family professionals when perhaps the ulterior motive is to avoid a change of leadership.

Instructors can approach the case from various angles. For a family business course, it can illustrate the dilemmas facing business families long dominated by the same patriarchal figure, showing how a member of the new generation has developed a long-term view. For an entrepreneurship course, the case can show how family businesess need to focus on continuous innovations in the area of engineering if they want to survive (the son-in-law is concerned that TECO is not producing tiny motors used in many applications). For a course on family governance, the case looks at TECO as company under dynastic control, that is, the founding family owns almost no shares but continues to exercise almost total control over the strategic direction of the firm.