The family company and the current society | Human Soul

7 July 2020

Families have a dual role in the market economy: they are both the basic units of consumption and the owners of productive resources. The word “family” must be understood in a broad sense. Families of a single couple or a single individual are more and more frequent in our societies. In underdeveloped countries and in rural areas of developing countries, self-consumption is very frequent, that is, families produce what they are going to consume, food, and even clothing; Since products for self-consumption are not counted in the statistics, international comparisons are sometimes very misleading.

The family business is consolidated year after year as an asset of great importance to the economy. It is estimated that 1.1 million companies are family members in 89% of the business fabric.
Its characteristics rooted in the vision shared by a business family make this type of company the greatest generator of employment. Currently, they create 67% of private employment, with a total of more than 6.58 million jobs and are responsible for 57.1 of the GDP of the private sector.

Its relevance crosses borders, with family businesses being the organizations with the highest turnover and job creation worldwide. It is estimated that in the European Union, there are 17 million companies that are family-owned and that generate 100 million jobs. In another benchmark market such as the United States, these types of companies occupy 80% of the business network and generate 50% of private employment.
Many people, even if they are not dedicated, in any way, to the issue of family businesses, but with some relationship in the business world, will have had the opportunity on some occasion to listen to a top manager complaining about that moment in which they were made charge of the business, of a business for which their salvation they had to send home without contemplation a series of relatives or relatives or friends of these, who scandalously parasitized on the operation of the company.

Commonly spectacular figures have been reported in the proportion of family businesses (controlled by families) 96 out of 100 are spoken.
But the complementary data given in this demography of the family business assigns to this type of companies only 40% of jobs, which, although important, has a different reading key: 4% of companies (not family) would occupy 60% of the population, in other words, family businesses do not get to be among the big ones, either because their own nature prevents them from growing, or because they soon cease to be family; “Familiarity” in second place would reach only the childhood and adolescence of the life of the large company.

In short, and for practical purposes, the family business would be absent from large companies. The family nature only occurs at the beginning of the life of the company, but later the companies “de-familiarize” to respond to the technological or investment demands that modern economic demands.

Also, in the most developed economies and among the most important and oldest companies, there is a notable percentage that has a family character.Given this, family businesses have been one of the elements of greater social efficiency, the personal action of undertaking that takes place in one of the aspects of a family nature has constituted a magnificent impulse of interpenetration and social promotion for many people.

Technological transformation and new disruptive competitors, led by large investment funds, are breaking into all sectors of the economy with great virulence. This shakes the leadership and stability of many of these family businesses. But the big problem is generational change. 45.7% are in full transfer from the first to the second generation. They are usually self-made entrepreneurs who have lived in an analog world, with which they neither understand the technological revolution we are experiencing nor have a sense of urgency. They do not intuit the great risk to which their organization is being exposed.

In addition, the economic and social stability model is jeopardized, since most of the competitors come from outside our borders. The only possible defense is to adapt family businesses to the new technological and digital environment. Thus they will be able to compete on equal terms of efficiency and value offer to the consumer.

Source: Family Businesses; Dynamics, balance and consolidation

Author: Imanol Belausteguigoitia


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