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UK family businesses more resilient than non-family firms, report

Family businesses in the UK are less likely to go bust than their non-family counterparts, according to new research.

Family businesses in the UK are less likely to go bust than their non-family counterparts, according to new research.

Entitled UK family businesses: industrial and geographical context, governance and performance, the report found that family firms – be it small, medium or large – have lower rates of insolvency than non-family owned businesses.

The survey, which analysed more than three million privately held firms in the UK between 2007 and 2009 and was conducted by the universities of Nottingham and Leeds for the IFB Research Foundation, also suggests that family run companies are less likely to dissolve.

“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,” said Dr Louise Scholes, co-author of the report, in a statement.

Corporate governance was also considered important by family businesses, with almost 20% of the companies involving more non-family directors than family at board level. Women were prominent, with 44% of family-owned businesses employing women as directors, as compared to only around 30% of non-family companies.

When it comes to the industry of operation, family-controlled groups tend to focus on certain sectors, found the report. While more worked in agriculture and fishing (44%), manufacturing, food and beverages, textile, retail, and motor vehicles, very few families opted to enter industries such as electricity, gas, transport and education.

Family businesses in the survey are those where the family owns more than 50% of the shares and at least one family member is a director of the company.

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