Family businesses are less likely to fail than their non-family counterparts due to low turnover and higher diversity on their boards of directors, a new study published by business schools at three British universities has revealed.
The research found 80% of family businesses have at least one female director, which had a positive impact on business success as more diverse boards were found to produce less conflict.
Conducted by researchers from Imperial College, Leeds University and Durham University, the study also found family businesses, which often have to rely on internal financing of projects, are more frugal in their spending, scrutinising business opportunities with greater intensity and taking fewer business risks than non-family firms.
The research is one of the first studies to analyse the board and ownership structure of private family firms in the UK and track their survival rates compared to other businesses.
Director of the Centre for Management Buyout Research (CMBOR) at Imperial College, Professor Mike Wright, said: “Family businesses could provide lessons to larger firms, as our findings show that a more diverse and experienced board of directors, which are prevalent in family firms, could be related to reducing failures in businesses.”
The study, which examined company data from 700,000 medium and large family and non-family firms, also highlighted the importance of family-orientated goals in business survival. These included preserving unity, wealth and providing employment for family members.