News & Updates

06/12/17
According to the Economist evidence suggests family businesses tend to under perform when compared with companies with more diverse ownership and management. A survey of the manufacturing industry by the Office for National Statistics showed that family-owned and -run companies are about 19% less productive than others. Family-owned companies that have non-family management do better. The article looked at reasons why this is the case and identified three main factors. Firstly, in the prioritisation of stability over risk-taking. Secondly innovation is incremental and focused more on improvements to existing products than new ones.

The final factor concerned education. In Britain 37% of managers in its family-owned, family-run companies have degrees, whereas 48% do in companies with a diverse share ownership. In Germany, 49% of managers in family-run and family-owned firms have degrees, rising to 70% in companies with a wider ownership.