Family businesses have been more resilient in meeting the
economic challenges created by the current recession, a study has
shown.
A report by academics from the universities of Nottingham and
Leeds, on behalf of the Institute for Family Business Research
Foundation, has revealed that private family firms are consistently
less likely to go out of business - either through insolvency or
dissolution - than their non-family counterparts.
The research found that medium-sized family firms in particular
appear to be most insulated against failure. In 2009, of the 16,479
businesses which became insolvent, just 292 of those that went bust
were medium-sized family firms. Similarly, non-insolvency related
dissolution rates for the same year showed that just 8.59 per cent
of medium family business failed compared to 9.85 per cent of
non-family firms that ceased trading.
The UK report on family businesses has been produced by Dr
Louise Scholes, Professor Mike Wright and Dr Hannah Noke at
Nottingham University Business School in collaboration with
Professor Nick Wilson and Dr Ali Altanar of the Credit Management
Research Centre at Leeds University Business School. It examines
the industrial and geographical background of family firms and
their governance and performance.
Dr Louise Scholes said: "Our analysis indicates that although
family firms may be smaller than non-family firms and perhaps do
not grow to the same extent, they are more able to withstand
recession, and perhaps this is their most important feature."
The report shows that family businesses account for just under
one-third (28 per cent) of all private companies in the UK, with a
turnover of more than £5m, and tend to be focused more in
agriculture and fishing, manufacture of food and drink, textiles,
wood and metal products, retail and car and motorbike maintenance
and repair.
Family firms tend to have older directors than non-family firms
and appear to offer greater opportunity for more senior positions
for women - a higher percentage of family firms (44 per cent) have
female directors than non-family firms (32 per cent).
Grant Gordon, IFB Director General, said: "This is important
research and it highlights the enduring strengths of the family
business sector. Family business can be defined by its commitment
to long-term stewardship and entrepreneurship and these qualities
can give a competitive advantage particularly during tough economic
times.
"The findings in this report also show that the family business
sector is ahead of non-family business when it comes to appointing
female directors."
A copy of the report UK Family Businesses: Industrial and
Geographical Context, Governance and Performance is available
fromlouise.scholes@nottingham.ac.uk