Family firms more likely to survive in recession-hit UK

Small Business
17 Nov 2011 15:15:00.000

PA358/11

Family businesses have been more resilient in meeting the economic challenges created by the current recession, a study has shown.

A report by academics from the universities of Nottingham and Leeds, on behalf of the Institute for Family Business Research Foundation, has revealed that private family firms are consistently less likely to go out of business — either through insolvency or dissolution — than their non-family counterparts. 

The research found that medium-sized family firms in particular appear to be most insulated against failure. In 2009, of the 16,479 businesses which became insolvent, just 292 of those that went bust were medium-sized family firms. Similarly, non-insolvency related dissolution rates for the same year showed that just 8.59 per cent of medium family business failed compared to 9.85 per cent of non-family firms that ceased trading.

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The UK report on family businesses has been produced by Dr Louise Scholes, Professor Mike Wright and Dr Hannah Noke at Nottingham University Business School in collaboration with Professor Nick Wilson and Dr Ali Altanar of the Credit Management Research Centre at Leeds University Business School. It examines the industrial and geographical background of family firms and their governance and performance.

Dr Louise Scholes said: “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.”

The report shows that family businesses account for just under one-third (28 per cent) of all private companies in the UK, with a turnover of more than £5m, and tend to be focused more in agriculture and fishing, manufacture of food and drink, textiles, wood and metal products, retail and car and motorbike maintenance and repair.

Family firms tend to have older directors than non-family firms and appear to offer greater opportunity for more senior positions for women — a higher percentage of family firms (44 per cent) have female directors than non-family firms (32 per cent).

 

Grant Gordon, IFB Director General, said: “This is important research and it highlights the enduring strengths of the family business sector. Family business can be defined by its commitment to long-term stewardship and entrepreneurship and these qualities can give a competitive advantage particularly during tough economic times.

“The findings in this report also show that the family business sector is ahead of non-family business when it comes to appointing female directors.”

 

A copy of the report UK Family Businesses: Industrial and Geographical Context, Governance and Performance is available from louise.scholes@nottingham.ac.uk

 

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Notes to editors:  The University of Nottingham, described by The Sunday Times University Guide 2011 as ‘the embodiment of the modern international university’, has award-winning campuses in the United Kingdom, China and Malaysia. It is ranked in the UK's Top 10 and the World's Top 75 universities by the Shanghai Jiao Tong (SJTU) and the QS World University Rankings. It was named ‘Europe’s greenest university’ in the UI GreenMetric World University Ranking, a league table of the world’s most environmentally-friendly higher education institutions, which ranked Nottingham second in the world overall.

The University is committed to providing a truly international education for its 40,000 students, producing world-leading research and benefiting the communities around its campuses in the UK and Asia. Impact: The Nottingham Campaign, its biggest ever fund-raising campaign, will deliver the University’s vision to change lives, tackle global issues and shape the future. For more details, visit:

http://www.nottingham.ac.uk/impactcampaign

More than 90 per cent of research at The University of Nottingham is of international quality, according to the most recent Research Assessment Exercise, with almost 60 per cent of all research defined as ‘world-leading’ or ‘internationally excellent’. Research Fortnight analysis of RAE 2008 ranked the University 7th in the UK by research power. The University’s vision is to be recognised around the world for its signature contributions, especially in global food security, energy & sustainability, and health.

 

The IFB Research Foundation is dedicated to promoting a deeper understanding of family business which makes a significant contribution to the economy and society. The knowledge fostered through the Foundation helps ensure the continued success and sustainability of the UK family business sector. The Foundation is a registered charity (no. 1134085).

More news from the University at: http://www.nottingham.ac.uk/news

Contact the IFB Research Foundation tel: 020 7630 6250

Story credits

More information is available from Dr Louise Scholes, on +44 (0)115 846 7782, louise.scholes@nottingham.ac.uk
 

Emma Thorne Emma Thorne - Media Relations Manager

Email: emma.thorne@nottingham.ac.uk Phone: +44 (0)115 951 5793 Location: University Park

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