Dates, numbers, facts
The economic significance of family businesses
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For more than a decade now, the Foundation for Family Businesses has regularly
commissioned the Centre for European
Economic Research (ZEW) and the Institute for SME research and entrepreneurship in Mannheim (ifm) to conduct
the economic importance of German family businesses. Our short film summarises the key statistics, such as the
the workforce and revenues accounted for by family businesses.
I. General Statistics
The Foundation for Family Businesses began to collect basic statistics on the economic importance of family businesses in 2006. Since then, these numbers have been regularly updated and revised. In contrast to other studies, the statistics are not based on extrapolations of samples, but on German firms as a whole. The data of 3.2 million enterprises are part of the analysis.
The studies differetiate between family controlled companies and owner-managed companies.
- Family controlled companies: In this definition all companies which are controlled by a limited number of natural individuals are subsumed. Ownership and management does not necessarily need to match. This definition is the most common in public as well as in scientific literature.
- Owner-managed companies: According to this definition, such companies are family businesses controlled by a small number of individuals, in which at least one of the owners also handles the management of the company.
Depending on definition, the quantitative importance of the family business to the economy varies:
- Family Controlled Companies: 90 percent of all German companies are family-controlled companies. They achieve 55 percent of sales and account for about 57 percent of all mandatory social insurance employment contracts.
- Owner-managed companies: 88 percent of the total number of enterprises are privately owned companies, 52 percent of all employees in Germany work in these companies. Owner-managed family businesses account for 50 percent of Germany‘s total sales.
More than 94 percent of all family businesses generate each less than one million sales revenue. In Germany, however, the number of very big family companies is remarkebly high compared to other industrial countries. 46 percent of the companies with sales revenues above 50 million Euros are family businesses.
The complete survey of all family businesses shows that they are particularly commonplace in construction and commerce. There are also clear regional differences. The number of family businesses is particularly high in the states of Thuringia and Rhineland-Palatinate. It is lowest in the city states of Berlin, Hamburg and Bremen.
II. The 500 largest family businesses
The study on the 500 largest family-owned companies compares their revenues and employment trends with the characteristics of non-family-run DAX enterprises.1
- In the TOP 500 family businesses (by employees) more than 6 million people were employed worldwide in 2020.
- The 500 best-selling family businesses generated sales of around 1.4 trillion euros.
Comparing employee numbers over time shows that family businesses have continually created new jobs. The 26 DAX-listed companies that are not family-controlled saw only a 4 percent increase in this time. The 500 largest family businesses created an employment growth of 25 percent worldwide from 2011 to 2020.
III. Listed Family Firms in Europe
Pubilicly traded family businesses in Europe do business with a longer-term perspective and more successfully than companies that are not family businesses – and the greater the influence of the founding family, the better their performance, as a study of the Foundation for Family Businesses from 2022 shows2
During the period under review, listed family businesses showed greater growth in employment. They also charted comparatively higher value creation per capita and were more profitable than firms that are not family businesses, as measured by the key indicators “return on assets” and “return on equity”. From the perspective of the capital market, it is also interesting that when it comes to total return (capital gains plus dividend yield), family businesses do considerably better at an average 7.0 percent than non-family businesses with 5.6 percent.
At 32 percent of all surveyed companies, listed family businesses make up a substantial part of the capital market. They even amount to more than 40 percent of companies in France, Germany, Greece, Italy and Portugal. By contrast, Finland, Ireland, the Netherlands and Great Britain have comparatively few family firms among their publicly traded companies.
Among family firms, those companies rate especially positively whose family founders continue to exert a crucial influence on the business. They make up more than 60 percent of listed family firms, and 20 percent of all the listed companies in the countries examined. These founding family businesses grow more quickly in terms of revenue and employment. They are more profitable than other companies, generating an average annual overall return of 7.6 percent, whereas family firms in which the founders are not involved reach 6.3 percent.
The till 2021 30 companies listed on the DAX include four family businesses: Beiersdorf AG, Henkel AG & Co. KGaA, Merck KGaA and Volkswagen AG. In this study, these three companies were assigned to the group of family businesses. The remaining 26 non-family-controlled DAX companies are referred to as DAX 26 companies in the text.
Stiftung Familienunternehmen (ed.): Listed Family Firms in Europe – Relevance, Characteristics and Performance, prepared by Assoc. Prof. Aleksandra Gregoricˇ, Ph.D., Prof. Dr. Marc Steffen, Rapp, Assoc. Prof. Ignacio Requejo, Ph.D., Munich 2022.
Munich, April 2023
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