The story of family business is often an opaque one.Few of these firms command the public profile of the world’s largest listed companies or the latest Silicon Valley darlings. This partially reflects a tradition of privacy, but also reveals a perception gap in the importance of these companies as economic engines.
The 2016 Global Family Business Index (pdf) study, compiled by St. Gallen University with EY support, reveals combined revenues from the world’s top 500 family businesses amounting to just over half that of the Fortune 500—an impressive feat. But even more impressive is their commitment to employment, with a staffing roster three-quarters the size of these same Fortune 500 peers.
At the same time, there is no doubt we are in a period of massive economic transformation. Global incomes, connectivity and population are all on the rise.
With family business critical to both economic activity and employment, can these companies weather the winds of change? This is an important question many multi-generation firms are asking and was a central theme at EY’s 2016 Strategic Growth Forum, held in Shanghai.
In Asia, family businesses are not standing still. Although China recently relaxed its one-child policy, the rule is just now making its mark on succession planning. With only one heir to choose from in the latest generation, traditional gender roles and hereditary customs are fading in importance.
It’s a change that is slowly working through the biggest family businesses across the region, noted SGF panelist Dr. Roger King, a Hong Kong-based academic and entrepreneur who has studied family-driven commerce. “Many businesses in Asia today are managed by the female side of the family,” said Dr. King. “And many more of these women are being encouraged to start their own businesses as well, with the financial support and social network benefits that come with their family name.”
Balanced gender representation in the family boardroom is not just a feel-good change; it can have an outsized impact on business performance, as revealed in the recent EY Staying power survey.