Listed large family businesses have not withstood the global economic crisis and its aftershocks. Their recession-related losses have proven to be massive, even when these companies are further down the ladder of stock indexes compared to the non-family owned and listed companies. Their results in Europe, for instance, betray the economic shake up afflicting them. This comes at a time when they are allowed to securitize their assets and list their shares on the stock market, let alone their attempt to boost their capital from investments by shareholders. But these institutions are not only known for their quality management and competitive production, but also for their ability to withstand economic crises. Even though the current economic downturn has confirmed this axiom, many famous family enterprises had a record collapse in 2008, such as the case with Peugeot and General Motors, while Hermes and others maintained their profits. Meanwhile, analysts observed that non-listed family enterprises remained intact during the crisis (Problème Economique – mid May 2009). This means that the calls from Western economists over more than four decades for family institutions to securitize their assets and list their companies in the stock market were not up to the economic challenges. These companies knew how to weather such challenges without letting shareholders enter their family businesses, altering the structure of their boards of directors from family-dominated ones into others controlled by capital owners. Family businesses play an important economic role in most countries. They are numerically speaking the most copious, with their contribution to the gross domestic product ranging between 35 and 65 percent in Europe, 40 to 45 percent in North America, and 50 to 70 percent in Latin America, with the highest rate being in Asia between 65 and 82 percent. They are the most ubiquitous among small and medium-sized enterprises, and are overrepresented among known major institutions in terms of turnover, such as “Wal-Mart,” “Peugeot,” or famous institutions such as Ford Motor, Samsung, LG Group, Carrefour, Fiat, BMW, Hermes, IKEA and Porsche. Certain countries provide exceptional examples of family-capitalism, such as in Germany, where the share of family businesses is close to the European average, and where a very high number of small-and medium-sized enterprises strive (500 to 2000 employees), including globally renowned family groups, some of them listed. They are mostly owned by family dynasties, such as BMW, Henkel, Busch and others. Family inherited dynasties also abound in Italy, but rather with small and medium-sized institutions, such as the mirror-maker Beretta established in 1625, and the maker of fruit preserves Amarelli established in 1731. Half of all family businesses in Italy employ less than 10 employees. Asia also hosts a wide array of family institutions, where family capitalism contributes largely to the gross domestic product. Japan has the oldest family enterprises, two of which are among the oldest in the world, handed down through generations of a single family line such as the construction firm Kongō Gumi established in 578, and the hotel conglomerate Hoshi Ryokan established in 718. Family enterprises are also the most extensive entrepreneurs in the world. This economic “epidemic” does not get the credit it deserves from the public, investors and researchers, but is rather considered a continuation of an obsolete tradition. In the Arab Gulf countries, the value of the assets belonging to family businesses is estimated at about 3 trillion dollars. These will be inherited by future generations which will increase its value and add to it. But they are not yet included in the new structure of global family institutions, and are not yet regulated by laws and legislations that guarantee their identity as family enterprises, when it is time to securitize their assets and list them in the stock market. So far, family enterprises seem to be more crisis-resistant than other types of companies. With the exception of their weak presence in the sectors most vulnerable to economic shake-ups, they have maintained their well-being in view of their careful long term strategy, as opposed to short term prospects and the effects of the leverages of financial capitalism. They are mostly active in textiles and foodstuff, as well as in trade and services which have so far kept enormous losses at bay. Concerned parties in investment funds related to family enterprises are calling for investments, even for ones as small as 10 percent, in non-listed family businesses. This is because the instruments of listed institutions remain sensitive to capital markets. In times of economic crises that hit financial markets and affect business activity, investments in small and medium-sized enterprises become more sensible. International corporate strategy experts defend non-listed small and medium-sized family institutions because they knew how to evolve amidst family intervention when need be. They are therefore immune to the crisis, and the family is prepared to finance them when necessary.
