Found virtually in every sector of the world’s economies, family enterprises are the most common form of business entity in the world. Yet, their ownership, management, and family composition create a complexity that requires special knowledge and skills in order to understand and advise them effectively.
Perhaps one of the most discussed issues in the field is how to define a family enterprise. There is no one definition, but there are a few working definitions that have evolved over the years.
It is helpful to begin understanding global data points by considering the various definitions in the field and more specifically the definition being used for the following data points from around the world.
Go here to see the definitions of family enterprises
For the purpose of the Global Data Points compiled here we are using the broadest definition (Definition 1) Family Firms are those in which multiple members of the same family are involved as major owners or managers, either contemporaneously or over time (Miller, Le-Breton Miller, Lester, Canella, "Are Family Firms Really Superior Performers,” Journal of Corporate Finance, Vol. 13, Issue 5, 2007).
Family Enterprise Statistics from around the World
The following data is a measure of the impact and scope of family enterprises globally.
- Family firms account for 2/3 (two thirds) of all businesses around the world (Interview with John Davis, Harvard Business School)
- An estimated 70%-90% of global GDP annually is created by family businesses.
- Between 50%-80% of jobs in the majority of countries worldwide are created by family businesses (European Family Businesses, 2012)
- 85% of start-up companies are established with family money (European Family Businesses, 2012).
- In most countries around the world, family businesses are between 70 and 95% of all business entities (European Family Businesses, 2012)
- 65% of family businesses are looking for steady income growth over the next five years (PWC, 2012)
- Contrary to the popular image of modern corporations as being widely held and run by professional managers, many of the world's firms continue to be controlled by families or the State (La Porta et. al.,Journal of Finance, 1999)
- Familial capitalism matters in most economies. However it matters in different ways--depending on the context family firms can exhibit best and worst practice ("History of Corporate Governance Throughout the World," Morck and Steier, 2005)
- 85.4% of China’s private enterprises are family owned (Sun Yat-sen University, Zhejiang University and Hong Kong-based family firm Lee Kum Kee, 2010)
- Next generation of wealthy family business owners in China have expressed an overwhelming desire to keep succession within the family (FT, 2014)
- European family businesses represent 1 trillion Euros in turnover (60% of all European companies) (KPMG, 2013)
- Family businesses account for 9% of the European Union’s GDP (KPMG, 2013)
- Family businesses create over 5 million jobs in Europe (40-50% of all employment) (KPMG, 2013)
- Family companies account for two-thirds of India’s GDP (KPMG, 2013)
- Family businesses account for 90% of gross industry output
- 79% of organized private sector employment is generated by family businesses (KPMG, 2013)
- 27% of overall employment is generated by family firms (KPMG, 2013)
- 13% of family businesses survive to 3rd generation and only 4% survive to the 4th generation (KPMG, 2013)
- Most of the region’s GDP, outside the oil sector, and over 80% of its businesses, are either family-run or family controlled (PWC, 2012)
- UK family firms generate 25% of the total UK GDP (PWC, 2012)
- Three-quarters of family businesses in the UK have procedures in place to deal with issues/conflict between generationa (PWC, 2012)
- At least half of all companies in the US are family businesses (Harvard Business School)
- Just over half of all publicly listed companies in the US are family owned (Harvard Business School)
Economic Impact of Family Enterprises
The following data has been compiled by Tharawat magazine
and published in Issue 22, 2014. For the purposes of the following, this definition of family business is used: "A family business will be considered a company that is controlled and majority-owned by members of the same family.”
General Contributions of Family Enterprises
- Family businesses show higher profitability in the long run
- Family businesses are less likely to lay people off and more likely to hire despite the possibility of an economic downturn
- Family businesses are more likely to give charitably to their respective communities and engage in extensive philanthropic activities
- Family businesses have a more long-term strategic outlook due to their main motivation consisting of creating a legacy for generations to come
- Family businesses are less likely to raise debt and are widely deemed financially prudent
Percentage of Family Businesses in the Private Sector
Percentage of Workforce Employed by Family Businesses
Percentage of Family Business Contribution to National