Family enterprises dominate the global economic landscape not just in terms of their sheer numbers. They are also a strong force of economic activity—creating jobs and wealth in many countries. According to the Family Firm Institute, family businesses create an estimated 70–90 percent of global GDP. In the US, family businesses contribute 64 percent of GDP and employ 62 percent of the workforce. In Europe, such enterprises represent 40-50 percent of all jobs. In Asia, they contribute over a third of nominal GDP.
A study published in Harvard Business Review looked at the financial performance of nearly 150 publicly traded family firms across the US, Europe and Mexico. It found that over the period studied (1997–2009), family businesses outperformed non-family companies in each of the countries examined. Another study of family businesses found that they are less likely to fail compared with other types of organizations, thanks to greater diversity in their boards of directors.
Their sustained performance across business cycles can be attributed to factors such as stable leadership, long-term value maximization, employee loyalty, intergenerational social networks and better alignment of management and shareholder objectives. The importance of these factors is recognized by family businesses themselves. For example, when asked what makes family firms distinctive, the director of Die Familienunternehmer, a lobby group for family businesses in Germany, pointed out that ensuring the survival of the firm trumps any desire to expand and to increase profits. According to him, this is the secret behind the good health that family firms in Germany enjoy even in times of crisis. In Europe, family companies were less likely than other companies to cut their workforce during times of economic crisis. In an interview with The Economist, the president of the Portuguese Family Business Association pointed out that family businesses in Portugal would consider layoffs only as a last resort, after salary cuts and investment and dividend retrenchment. In Italy, Marcegaglia Group, a family-owned steel maker, was the only company in the industry that did not lay off workers. According to board and family member Emma Marcegaglia, Italy lost fewer jobs in some sectors than other countries thanks to its large numbers of family firms. Finally, one of the largest listed diamantaires and jewellery family business from India identifies long-term focus as a key factor in the firm’s decision-making.
Despite the resurgence of interest in family enterprises, one area that remains relatively neglected is the internationalization of such firms.
There is scant research—theoretical and empirical—on the internationalization journeys of family firms. This is unfortunate, because going global is becoming a strategic imperative for many family firms. For some, it may even be a matter of survival. Moreover, the growing global predominance of family multinationals from emerging markets further highlights the need for a better understanding of how family businesses expand internationally.