The largest 500 family businesses collectively generate US$7.28 trillion revenues and employ 24.1 million people worldwide.
Breaking down the Index by region
Almost half (236) of all the businesses in the Index are based in Europe, indicating it is a nurturing environment for family-owned businesses.
Germany is home to 16% of firms as well as two of the largest in the Index, Schwarz Group and BMW – which reflects the strength of the German economy as well as the fact that 90% of all businesses in Germany are family-controlled, according to the Foundation for Family Businesses.
The Americas continue to be the base for one-third of family businesses. It is no surprise that the US, as the world’s largest economy, boasts the highest number of family businesses (119) in the Index (24%). Collectively, these 119 companies contribute 81% (US$2.5 trillion) of the combined revenue in the Americas and employ 6.4 million people. Seven out of the 10 biggest family businesses globally are from the US, including Walmart, Berkshire Hathaway and Ford. Canada and Mexico each have fourteen family companies in the Index.
India’s two largest family businesses, Reliance Industries and Aditya Birla Group, are among the twenty largest family businesses in the Index.
Mainland China, Hong Kong and Taiwan account for 32 family businesses. Japan lists nine companies, and South Korea totals 14 family businesses, including SK Corp and LG Corporation, which are both among the twenty largest firms in the Index. Collectively, these 55 companies contribute 87% (US$835 billion) of the combined revenue in Asia-Pacific, which has 74 family businesses in the Index.
Taking a sector view
Many of the family businesses in the Index operate in either the traditional consumer or manufacturing sector, which is a reflection of their age. Many of the technological, telecommunications and financial products and services that are commonplace today didn’t exist on average 70 years ago. Younger family firms are now making inroads into these sectors, however.
The share of consumer-based family businesses – most of which are more than 80 years old – is more than one-third (37%). There is still a large number of family businesses in the food sector, while advanced manufacturing and mobility businesses now account for 27% of the Index. And of these, diversified industrial products family businesses account for an impressive US$1.08 trillion in revenues.
According to Josh Wei-Jun Hsueh, Assistant Professor from the Center for Family Business at the University of St. Gallen, “As the family and wealth grows over generations, the business becomes more complicated. In turn, the family increasingly adopts a portfolio and equity approach to manage the growing business.”
Family businesses in the consumer sector held up well during COVID-19. They also proved to be a major employer, employing more than 10 million people (43% of the entire Index workforce), or more than 56,000 people on average.
As the family and wealth grows over generations, the business becomes more complicated. In turn, the family increasingly adopts a portfolio and equity approach to manage the growing business.
Building success across generations
The success of family businesses is often down to the extraordinary efforts and vision of the first generation, with the next generation building on that legacy while following its own approach.
In some cases, generations and generations of family members have played a part in guiding the business over the course of decades and even centuries. The oldest family business on the Index, Japan’s Takenaka Corporation, has been in business for more than 400 years. Meanwhile, more than half of the German businesses on the Index are over 100 years old.
Business success often takes time – which explains why 75% of the family businesses in the Index are over 50 years old. 32% are over 100 years old, generating US$2.1 trillion in revenues. But youth is not necessarily an impediment to the growth, or the scaling of a family business. The majority of businesses are between 50 and 100 years old and account for nearly half of all revenues on the Index.
Sustaining the focus on gender diversity
The 500 largest family businesses have 4,418 board seats in total with 1,041 held by family members. Of those, 17% are female and 83% male. The share of companies with female family members on boards is 31% and is on par with global industry benchmarks (pdf).
Women are most likely to be board members of family businesses in Europe. Of those companies that do have female directors, 54% are from Europe, while 30% are based in the Americas and 13% hail from Asia-Pacific.
Gender diversity among chief executives poses an equal challenge to family businesses as to non-family firms. Five percent (27) of the family businesses on the Index have female CEOs – comparable with industry benchmarks (8% (41) of Fortune Global 500 companies). Female CEOs are marginally more likely to be family members than external appointments.
Gender diversity at both board and management level will continue to be an issue family businesses will need to address. The Nasdaq recently set diversity rules for listed companies, requiring at least two diverse directors, at least one of whom identifies as female3 to be appointed at board level. And investors have made diversity a priority and are prepared to use their voting power to drive progress.
NextGen could bring more ‘age diversity’ and new leadership to boards
The average family business board member is 61 years old, but the next generation is on its way. One in five businesses on the Index have a next generation member (aged 40 or younger) on the board or in the management team. This represents a major opportunity for boards to diversify and extend their talent pool.
The next generation can bring professional expertise, valuable technology and digital capability, and insights into the current generation of consumers and employees. Generational attitudes differ on sustainability, for example. Gen Z and Millennials are more likely than older generations to favor sustainable lifestyles and share information about sustainable products with peers.
Public family businesses engage on environmental, social and governance issues
Environmental, social and governance (ESG) issues are becoming more prominent as employees, customers, investors and other stakeholders are demanding that companies play a more active role in addressing the world’s greatest challenges.
Formal ESG metrics53%
reported at least once against formal ESG metrics
A good proportion of the family businesses on the Index are reporting formal ESG metrics. 53% (264) reported at least once on the GRI Sustainability Disclosure Database. Fifty-one percent of those companies come from EMEIA (Europe, Middle East, India and Africa), followed by 30% from the Americas and 19% from Asia-Pacific. The US is the country with the highest number (42) of family companies that contributed to the GRI database.
Privately owned family enterprises using ESG metrics to manage but not report on their businesses are missing an opportunity to attract talent, win customers and grow future revenues.
The Family Business Index is based on a global ranking of 500 family-owned businesses according to their revenues. The criteria to enter the Index are as follows:
- The business should be in the second generation or more and have at least one family member on the board of directors and/or the executive leadership. If the business is still in the first generation, then at least two family members should be a member of the board of directors and/or the executive leadership.
- The family should have substantial ownership or decision-making influence in the business. Private companies where the family controls (directly or through a family foundation or trust) more than 50% of the shares and voting rights, or public companies where the family holds (directly or through a family foundation or trust) at least 32% of the shares or voting rights, are considered for the Index.
- To allow wider representation of families, the Index features one business per family. If two or more companies from the same family qualify for the Index based on their revenues, the Index will feature either the parent/holding business or the business with highest revenues.
- Revenues of featured businesses should originate from published accounts that are no more than 24 months old. The data is collected from commercial business databases and the public domain.
- Data sources used to generate the Index include the public domain, filed and published financial statements or annual reports, and commercially accessible databases, including Bloomberg, S&P CapIQ, Orbis, BoardEx and Refinitiv.
The Index is drawn from available data in the public domain and should not be considered a formal or certified list of the largest family businesses in the world.