Family businesses are better at weathering crises

4 January 2023, Munich. Family businesses drive the creation of jobs in the German economy, even in times of crisis. This was demonstrated by a comparison of the 500 largest German family-owned companies with Germany’s blue-chip stock market index DAX between 2011 and 2020. While the 26 non-family-controlled companies in the DAX 30 reduced employment in the first year of the coronavirus pandemic, the 500 largest German family-owned companies continued to hire. The study by the Foundation for Family Businesses looked at the top 500 family businesses in terms of turnover and employment over a ten-year period.

The German economy’s anchor of stability

“Particularly in view of the current price and commodity crises and the risks to the economy, the German public should be aware of this: Family businesses are Germany’s anchor of stability and contribute significantly to our prosperity”, says Professor Rainer Kirchdörfer, Chairman of the Foundation for Family Businesses. “The study shows that family businesses have proven to be better able to survive crises and maintain their workforce, even in difficult times – especially in Germany. That is why it is so essential not to penalise this type of company in the current challenging situation.”

As the DAX was only increased to 40 members in autumn 2021, the multi-year comparison still uses the DAX 30 – after adjusting for the four family-owned companies included in the index: Beiersdorf, Henkel, Merck and Volkswagen. According to the study, the top 500 companies increased their workforce in Germany by 25 per cent, while the 26 DAX companies only increased their domestic workforce by four per cent. Overall, the top 500 companies created over 1.5 million new jobs worldwide in the period under review, while the 26 DAX companies created roughly 390,000. To provide some context: when the Foundation for Family Businesses first analysed the two groups of companies in 2007, they had almost the same number of employees in Germany.

In terms of turnover, the top 500 family businesses also grew faster than the 26 DAX companies, achieving average turnover growth of 3.77 per cent. In contrast, the 26 DAX companies recorded an increase of 1.69 per cent.

Six million people work for the top 500 family businesses

The study by the Foundation for Family Businesses emphasises the overall economic importance of family-owned companies. In 2020, the top 500 family-owned companies employed six million people worldwide, while the 26 DAX companies employed just over half that number at 3.1 million. (It is important to note that the Volkswagen Group was categorised as a family-owned company for the first time after lawsuits before the European Court of Justice regarding the distribution of voting rights were finally settled).

Large family businesses are primarily active in the manufacturing and retail sectors. North Rhine-Westphalia is Germany’s federal state with the most top 500 family businesses; Baden-Württemberg and Bavaria follow in second and third place by a clear margin. Looking at the companies with the highest turnover, most of them are based in Baden-Württemberg, followed by North Rhine-Westphalia and Lower Saxony.

The study was conducted by the Institute for SME Research at the University of Mannheim.