Family Business Insights

EXCLUSIVE EXPERT VIEW: St Gallen University On Wealth And Ubiquity Of Family Dynasties

Dr Miriam Bird and Professor Nadine Kammerland, St Gallen University, 15 June 2015

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Academics from a prominent Swiss university look at the qualities that enable family business dynasties to endure - with lessons that wealth managers and advisors should heed.

This item on the forces shaping family-run firms – an obviously important segment for wealth manages – comes from Dr Miriam Bird and Professor Nadine Kammerland of St Gallen University in Switzerland. This publication is grateful for the opportunity to share these experts’ insights and welcomes reader responses. Readers can email tom.burroughes@wealthbriefing.com

Are family firms an anachronism of the 20th century? Hardly. Still today, family businesses are prevalent all around the world and constitute one of the most dominant business forms, thereby contributing substantially to employment and economic growth.
 
The purpose of the newly compiled Global Family Business Index is to shed light on the largest family firms worldwide. In an effort to better understand the magnitude and ubiquity of family firms and how they surround us in our daily lives, we – a team of researchers at the Center for Family Business at the University of St. Gallen – collected and analysed data on the 500 largest family firms worldwide. Here is what we found:

What is the economic impact of family dynasties? We found that the biggest 500 family firms employ altogether a workforce of around 20.9 million people. This number equals approximately the entire population of Australia. Furthermore, in 2013, they generated revenues equalling $6.5 trillion. Some 45 per cent of those revenues were generated by European family firms, while US family firms contributed 35 per cent to those revenues.

Where are most family dynasties located? Nearly half of the largest 500 family firms are located in Europe (49.8 per cent) followed by the US (24 per cent) while the rest are divided between Asia (17.6 per cent), South America (7.2 per cent), Australia (0.8 per cent), and Africa (0.6 per cent). This refutes the commonly held belief that family businesses are becoming less and less important in Western societies due to changing demographics and the weakening of family ties.

Within European countries, large family businesses are particular prevalent in Germany (a total of 94 out of the 500 family dynasties), Italy (31), and France (28).

What does the typical family dynasty look like? The majority of family firms (55 per cent) operate in the manufacturing and construction sector while around 40 per cent are active in the service sector. Family firms are particularly dominant in industries such as retail and wholesale, diversified industrial products, and consumer products. One possible reason for the strong dominance of family firms in these industries is their ability to build and sustain strong brands across generations.

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