Research - 14.09.2021 - 00:00
14 September 2021. Despite the economic difficulty caused by the COVID-19 pandemic, family-owned businesses have managed to stay resilient. The new Global Family Business Index from the Center for Family Business at the University of St.Gallen (CfB-HSG) and EY demonstrates that the world’s largest 500 family businesses generated US$7.28t in revenues and employed 24.1m people across 45 jurisdictions. Compared to the Fortune Global 500 (with US$33.3t in revenue and 69.9m employees), the 2021 index reveals how the largest family-owned firms have been stable during the recent economic turbulence.
17 Swiss firms in the index
Among the 500 largest family firms around the world, 17 Swiss family firms have been listed on the index. The top five firms include Roche Holding AG (US$68.5 billion in revenue in 2020), Gunvor Group Ltd (50 billion in revenue), Kühne Holding AG (23.3 billion in revenue), Tetra Laval Holdings B.V. (16 billion in revenue), and Compagnie Financiere Richemont SA (15.6 billion in revenue). Together with the other Swiss family firms on the index, they contributed 255 billion in revenue and employed nearly 603,136 people in 2020.
Family businesses in the hospitality and tourism industries have been significantly affected by the COVID-19 pandemic and many (especially in the consumer sector) took the opportunity to shift their manufacturing capabilities to create essential items such as face shields and ventilators.
On the 2021 index, nearly half (236) of family businesses are based in Europe. In particular, Germany is home to 16% of the companies on the index, reflecting the strength of the German economy and the long tradition of family businesses there (with an average age of 109 years and the oldest family business is Merck KGaA at 353 years). Following Europe, North America accounts for 30% of the companies in the list. Seven of the top ten family firms in the list are located in the US. In Asia, 55 family firms in mainland China, Hong Kong, Taiwan, Japan, and South Korea contribute 87% (US$835 billion) of the combined revenue in Asia-Pacific area, and three of them are in the top twenty.
Chance for diversification and sustainability
In the 2021 index, CfB-HSG and EY have also examined family firms’ commitments to diversity and inclusion, and environmental, social and governance (ESG) standards. There is still potential for family businesses to work on these areas. The average age of family businesses’ board members is around 60 years. Nearly one in five businesses on the index have a next generation member on the board or in the management team. The next generation’s expertise in technology and insights into the evolving business landscape will be essential to sustained growth.
As family firms continue to seek diversification, the number of firms with at least one female family member on their boards has improved to 31% in 2021 (only three of 17 Swiss family firms) Only 5% (27) of firms on the index have female CEOs (while none in Switzerland), similar to the 8% (41) of Fortune Global 500 companies.
Regarding ESG commitments, 53% (264) of family firms on the index have reported their sustainability activities at least once in the past two years. Nearly half of those (44%) are from Europe (including 7 firms from Switzerland, 35 from Germany, and 2 from Austria. Non-reporting companies may have missed the opportunity to openly communicate their positive social impacts, to attract new talent, to win customers, and to achieve better market evaluation.
Thomas Zellweger (Managing Director of the Center for Family Business at the University of St.Gallen) and Josh Wei-Jun Hsueh (Assistant Professor at the Center for Family Business, University of St.Gallen) suggest:
“As family, business, and wealth grow over generations, the challenges business families face become more complicated. In turn, families increasingly adopt a professionalized approach to manage their portfolio of assets and the demands of various family members.”
Helena Robertsson, EY Global Family Enterprise Leader, says:
“Family-owned enterprises have shown incredible resilience through the COVID-19 pandemic, prioritizing sustained workforces and pivoting when necessary to overcome new challenges. As society continues to move forward through these tumultuous times, these businesses are well-placed to continue their legacy.”
For further information and analysis, please visit the Global Family Business website.
Prof. Dr. Josh Wei-Jun Hsueh
Assistant Professor in Family Business at Center for Family Business, University of St.Gallen (CfB-HSG)
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