Family Businesses Excel During Eurozone Crisis

Germany is widely regarded as the most stable economic country within the Eurozone — and the most stable segment of their economy?  Family Enterprise.

The institute for Small Business Research in Germany, a resource for Family Businesses and other small-midsize companies, conducted an independent study of 400 family-run companies turning over more than €50 million compared to turnover in German companies overall.  The study’s aim was to understand how family businesses are responding to the economic downturn in Europe with respect to job creation.  The results were highly favorable towards family enterprise, concluding that “family businesses haven’t seen any big decrease in turnover.  In fact, the euro crisis has been good — companies can’t export much to European countries but with a weak euro, there is cheaper export to the US and China.”

Additionally, nearly 50% of family businesses surveyed were actually increasing investment into their business and focusing R&D funds on innovation.  Throughout this investment period, German family companies have had access to a higher quality pool of employees and favorable conditions for developing and manufacturing “top-level products.”  It seems that a history of fiscal responsibility has “paid off” so to speak, allowing family businesses in Germany to flourish in a down economy.

Finally, the study suggests concerns around longevity.  Frank Wallau, who conducted the survey, found a strong desire for the generational transfer of a business.  Wallau found that “a family business in Germany now will continue to be a family business for the next 20 to 30 years.  German families prefer to own and manage the business with family members.”

The study illustrates the strength of family run companies, that interact intimately between family, personal and business life segments and therefore have a greater stake in the success of their enterprise than corporations with detached shareholders.

For more reading on this topic, consult the CampdenFB article titled “Euro Crisis ‘has been good’ for German Family Businesses.

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