My colleague Prof. Marta Elvira asked me if I could write about family business and globalization. I do so with pleasure but with the fear that some readers might find my conclusions disappointing.
In this post, I won’t refer to large corporations but to medium-sized companies, defined by the European Union as firms with revenues of €50 million and up.
Let’s start with a general overview of companies–both family and non-family–in Spain, the European Union and the United States. Based on our research, 0.10% of Spanish companies earn sales over €50 million, and 0.15% of U.S. firms. This data might come as a surprise but these are the official figures from Spain’s National Institute of Statistics (INE) and the U.S. Census Bureau.
As far as the European Union is concerned, the data from Eurostat isn’t that far off: the percentage of EU companies with 50 and more employees stands at 2.58%, and only 0.5% of companies employ 250 people or more.
Clearly, we’re talking about a tiny fraction of family firms, because I think it’s safe to say that global expansion requires a certain organizational size. As I’ve said on many occasions, the world economy is made up of SMEs, a fact confirmed by our research.
Before the outbreak of COVID-19, it seemed as though firms had to be global or risk being labeled in the “loser category.” In the pandemic’s wake and its ensuing supply chain crisis, many firms are seriously reconsidering their levels of global exposure.
Let’s turn to the topic of family business. In my experience with family-owned firms, whenever there’s talk of globalization–or previously, internationalization–the same question crops up: “Who in the family is willing to live in that country?” I intentionally started this post with data to offer some context on the size of businesses weighing this option. And for this company size, the question seems relevant.
That question leads us to the next one: “What’s the degree of familiness?” defined by Habbershon and Williams as “the bundle of resources distinctive to a firm as a result of system interactions between the family, its individual members and the company.”
It’s worth thinking about familiness before broaching the subject of globalization and numerous other issues in the realm of family business because of its indisputable role in shaping the company’s strategic decisions.
In a future post, we’ll explore the impact of familiness on corporate strategy and financial performance.