The Impact of Family Businesses
Family businesses have shown remarkable resilience and growth, outperforming the global economy in recent years. According to the 2023 Family Business Index, which tracks the 500 largest global businesses that have been passed down through multiple generations of a family or have multiple family members in leadership roles, these family businesses have collectively grown their revenues by 10% over the past two years. These 500 family businesses generate more than $8 trillion in revenue and employ 24.5 million people, making them the world’s third-largest economy when considered as a single entity.
The Role of Succession Planning in Family Businesses
Succession planning is critical for family businesses to ensure a seamless transition of leadership across generations. Among the top 500 family businesses, only 55% have a family member as CEO. Koch Industries, Dell, Comcast and Bosch are examples of continued family leadership. However, older firms have fewer family CEOs than younger firms, in part due to the limited number of family members in newer firms, creating challenges for multigenerational control.
The Dominance of Family Businesses in the United States
The United States leads the world in family businesses, with 118 companies in the top 500. Together, these companies account for $3.4 trillion in revenues. The entrepreneurial spirit and long tradition of free enterprise in the United States have fueled the growth and success of these legacy family businesses.
One notable example is Wal-Mart, which alone accounts for one-fifth of U.S. family business sales. The $611 billion megamart giant remains firmly under the control of the Walton family, with Chairman Greg Penner the grandson-in-law of founder Sam Walton.
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The Ford family’s enduring legacy in the automotive industry continues in 2023. Bill Ford, Henry Ford’s great-grandson, serves as executive chairman, while Edsel Ford, a cousin, retires from the board. Descendants Alexandra Ford English and Henry Ford III are ready to join the board. In 2022, Ford Motor recorded an annual gross profit of $23.6 billion.
Germany’s Family Business Legacy
Germany follows closely behind the United States in the number of top family businesses, with 78 companies in the top 500. These companies collectively generate $1.13 trillion in revenue. One prominent example is Germany’s largest automaker, Volkswagen, which is run by the Piëch/Porsche family and generated $299 billion in revenue in 2022.
Another is the Schwarz Group, a German grocery conglomerate that includes Lidl and Kaufland. Founded in 1930 by Josef Schwarz, the company has grown from a fruit wholesaler to a household name in Germany. The total revenue of the companies in the Schwarz Group for the 2022 fiscal year was $167.8 billion.
Asia Family Business Leaders
In Asia’s evolving economy, family-owned businesses play a critical role in growth and resilience. Take Toyota, for example. Founded in 1937 as a textile machinery manufacturer, the Toyoda family’s move into automobiles demonstrated its commitment to quality and innovation. Today, Toyota shines with advanced technology, efficient production, and sustainability, generating $267.3 billion in revenue in 2022.
Similarly, the Lee family transformed Samsung from a modest South Korean trading company in 1938 into a global technology giant. Samsung’s commitment to research and development has made it a leader in consumer electronics and semiconductors. In 2022, Samsung Electronics generated revenues of approximately $234 billion.
