EY Study: Largest 500 family businesses prove economic resilience despite the COVID-19 pandemic

Despite the turmoil brought on by the COVID-19 pandemic, family-owned enterprises have managed to stay resilient. The world’s largest 500 family businesses generated US$7.28t in revenues, employing 24.1m people across 45 jurisdictions. These and other findings were published today in the 2021 EY and University of St. Gallen Family Business Index which reveals how the largest family-owned businesses have responded to the recent turbulence in the global economy.

“Large family businesses have shown incredible resilience during this period, prioritizing employee support and turning to new business solutions. To get through this difficult time, they choose to diversify their boards of directors, promote the new generation in leadership roles and set new standards in addressing environmental, social and governance issues”, says Raluca Popa, Associate Partner, Tax & Law, Strategic Growth Markets leader, EY Romania.

While family businesses, especially those in the hospitality and tourism industries, have felt the effects of the COVID-19 pandemic, many took the opportunity to pivot. A number of organizations shifted their manufacturing capabilities to create essential items like face shields and ventilators, while others provided financial support to other businesses, displaying their commitment to innovation and an enduring sense of social responsibility. Consumer family businesses in particular endured, achieving on average US$15.39b in revenue. Overall, family-owned enterprises in the consumer sector remained a significant employer, employing on average 56,150 people.

In spite of the tumult of the past year, Europe continues to be a nurturing geographic environment for these organizations. Germany is home to 16% of the companies on the Index, reflecting the strength of the German economy and the historic nature in which family businesses tend to settle in the country – 90% of all businesses in Germany are family-run. One third of featured family businesses are based in the Americas, with the US boasting the highest number of family businesses (119 or 24%).

These organizations contribute US$2.48t in revenue in the Americas, employing 6.4m people. Several of the biggest private family-owned enterprises by revenue globally are located in the US. Fifty-five of the businesses that hail from mainland China, Hong Kong, Taiwan, Japan and South Korea, contribute 87% (US$835b) of the combined revenue in Asia-Pacific. Asia is home to three of the top 20 businesses, as well as the oldest family business in the Index – Japan’s 400+ year-old Takenaka Corporation.

As a growing number of organizations make commitments to diversity and inclusion, and environmental, social and governance (ESG) standards, family businesses continue to increasingly focus on these areas. The average family business board member is 61 years-old, and 80% of businesses on the Index do not have family board members under the age of 40.

Bringing in the next generation’s expertise, insights, technology and digital capabilities into the evolving customer landscape can help to sustain growth. And as boards continue to seek to diversify, the share of companies with female family members on boards has improved, reaching 31% in 2021. At the same time, only 5% (27) of the family businesses on the Index have female CEOs, similar to the 8% (41) of Fortune Global 500 companies.

Looking more closely at ESG commitments, family-owned enterprises are working to achieve new goals. At least 53% of family businesses on the Index are reporting against formal ESG metrics. Half of those (51%) are from EMEIA, followed by companies in the Americas (30%) and Asia-Pacific (19%). ESG reporting represents an opportunity to demonstrate the positive impact companies are already making, and potentially helps to attract new talent, win customers and grow revenues.