Global Economy
Family-controlled firms dominate European business
By Jo Fahy,
Apr 30, 2015 - 7:44 AM

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A new study takes aim at the stereotype of the faceless, corporate machine, showing that family-controlled enterprises such as Wal-Mart or Switzerland’s Roche make up 80-90% of all companies across the globe. Europe has a big presence among the world's top 500 family-controlled firms.

The Center for Family Business at the University of St Gallen worked with Ernst & Young to look at the 500 largest companies owned by families, in terms of their revenue. Some of the world’s most recognisable brands were on the list, from Wal-Mart and Roche to BMW and IKEA.

Miriam Bird from the Center, who compiled the data with a colleague, told they wanted to find out how dominant family-run businesses were in the global economy.

“A lot of these businesses surround us in our daily lives. You might read a newspaper from a family-run publishing business [without realising], or drive a Volkswagen firms are really dominant.”

They found that firms in the retail and wholesale sectors made up the largest group in the index, with 18% of the companies operating in this field, followed by diversified industrial products (17%).

The index counted privately-held firms where a family holds more than 50% of voting rights or a publicly-listed firm where a family holds more than 32% of these rights, judging these percentages to be the tipping point where a family can dominate important decisions.

“We generally believe that family firms are in Asia, or countries where family ties are very very strong,” Bird explained. The index however revealed some interesting geographical data — half of the firms in the top 500 are based in Europe, and 24% in North America.

Bird added that the secret to these family-run firms being successful lay in the way they conduct their business and relationships.

“They have managed to transfer the company really successfully to the next generation, they have a superior culture in the company, where they really try to retain their employees and build unique incentive systems, fostering loyalty.”

Global Family Business Index"comprises the largest 500 family firms around the globe. It provides impressive evidence of the economic power and relevance of family firms in the world."

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