- The 500 largest family businesses generate US$8.02t and employ 24.5m people across 47 jurisdictions
- 17 family enterprises in Southeast Asia on the list
- More needs to be done to close the gender gap with women holding only 23% of board seats
The 500 largest family businesses in the world are vital to the health of and are growing faster than the global economy. Collectively, they generate US$8.02t in revenues and employ 24.5m people worldwide across 47 jurisdictions, high enough to be the third largest national economy by revenue, behind only the US and China. These and other findings were published in the 2023 EY and University of St.Gallen Family Business Index, which is a ranking of the 500 largest family businesses in the world by revenue, and issued every two years.
Longevity and stability continue to be a staple among the companies listed on the 2023 index, as more than three-quarters (76%) have been around for more than 50 years, and nearly one-third (31%) are more than a century old. This is further reinforced by their board structures, with almost one-quarter of all board seats (23%) being held by family members and nearly half (45%) having family members as CEOs.
While most companies in the index are based in Europe (46%), the US is the leading individual jurisdiction (24%). Overall, exactly half of all the businesses in the index are located in Europe, Middle East, India and Africa (EMEIA), with the Americas home to 34% and Asia-Pacific housing 16% of companies in the index. The contribution of Asia-Pacific has been consistently increasing ever since the first edition of the index in 2015, from 12% to 16% this year. Meanwhile, regarding industry sectors, consumer-based family enterprises lead the index (37%) thanks to their dominant share in the Americas. Companies in Advanced Manufacturing and Mobility follow (29%) as this sector is in the lead in EMEIA and Asia-Pacific.
17 family enterprises in Southeast Asia on the list
According to the study, 17 family enterprises in Southeast Asia made it to the top 500 list, including Indonesia (2), Malaysia (4), the Philippines (5), Singapore (2) and Thailand (4). Together, they hire close to 850,000 people, and the average age of board members across these family enterprises is 62 years.
Low Bek Teng, EY Asean Family Enterprise Leader, says:
“Having board members of an average age of 62 years highlights the need for Southeast Asia’s family enterprises to examine board renewal and transition to the younger generation – and this needs to happen within the next few years. As family enterprises grow in size and complexity, a good succession plan becomes an imperative. There have been cases where family enterprises faced issues in transiting to the next generation due to governance challenges or internal conflicts. Hence, conducting succession planning earlier and communicating regularly to manage differences will go a long way to ensuring the long-term survival of the company.
“At the same time, the current economic challenges from geopolitical risks, rising inflation and interest rates means that family enterprises may need to take immediate and additional steps to protect the value of their assets and investments. They will need to understand the relevant risks and how each of these risks may impact their businesses. Bringing in the next generation to work and learn alongside the current board and management will help the younger team better appreciate the intricacies of the business.”
More needs to be done to close the gender gap on boards
Even though successful family enterprises are recognized for being agile, innovative and purposeful, there is still some way to go with gender parity. Globally, around 6% have a female CEO, and women hold only 23% of all board seats. North America and Europe stand out on the index with female CEOs but still only around 7%. When it comes to the distribution of board seats among family members, Europe leads the way with women occupying 25% of family-held board seats, considerably above the global average of 20%.
Helena Robertsson, EY Global Family Enterprise Leader, says:
“Family-owned enterprises continue to show an impressive ability to adapt quickly and I applaud them for their continuous transformation and innovation. As we anticipate a potential slowdown in global economic growth for the year ahead, the long-term perspective of these companies and the desire to further a legacy will be critical drivers for maintaining resiliency and ensuring a strong succession plan is in place. I especially look forward to seeing how the next generation will further focus on investing in technology and diversifying the face of boards while maintaining significant contributions to the global economy.”
Thomas Zellweger, Professor from the Center for Family Business at the University of St.Gallen, says:
“The overall composition Index is stable, with only 7% new entrants this year, proving the resilience of family firms. The growing prominence of Asia-Pacific companies is also striking and a sign of the economic power these family-owned enterprises wield in the region. It will be interesting to observe how these long-established firms continue to adapt and prosper in light of social, environmental, economic and technological change. The role of the next generation in tackling these challenges will be absolutely critical.”
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