Family businesses are a decisive factor in establishing equality in living conditions between urban and rural areas. In rural regions with many family businesses, the population is increasing and fewer young people are leaving. Regions with a high density of family businesses also have a higher level of prosperity, higher training rates, lower unemployment figures and are more innovative.
These are the results of the first scientific study which comprehensively examines the contribution of family businesses to rural areas. It provides important findings on fulfilling the constitutional mandate of ensuring equality in living conditions between urban and rural areas. The study was produced by the Institute for Economic Research (IW) on behalf of the Foundation for Family Businesses.
“Family businesses ensure that people can live well outside big cities. They strengthen social and economic cohesion and enable the same living conditions in urban and rural areas,” says Professor Rainer Kirchdörfer, member of the Executive Board of the Foundation for Family Businesses. “There can only be equal living conditions in Germany with strong family businesses.”
The study examines how 215 rural districts perform with regard to population development, innovation, prosperity, unemployment, education and local finances. It also records the proportion of family businesses. To better examine the importance of family businesses for a region, the researchers focus on larger family businesses with 50 or more employees and on relevant sectors. The family businesses thus identified employ 2.5 million of the overall 5.7 million workers at all comparable companies.
In all categories without exception, districts with a high proportion of family businesses performed better:
“Family businesses assume responsibility in their home regions,” says Kirchdörfer. “While most anonymous major corporations have their headquarters in the big cities, family businesses are firmly rooted in their regions. Many of them are global market leaders. They offer qualified employment not only in manufacturing but also in research and development. This economic strength has a positive effect on an entire region.”
The results of the study should therefore serve as a guide for policy makers. “We are envied worldwide for this decentralised structure of strong family businesses. Politicians should strengthen this landscape,” says Kirchdörfer. “Family businesses will only be able to be successful from the regions if the general conditions there are good.”
The coronavirus crisis, for example, has clearly demonstrated once again that the digital infrastructure in many places must be urgently improved. Support should be given to setting up innovation hubs in rural regions. A well-developed education system is also important – from childcare facilities to universities and vocational schools.