The great importance of family businesses

Economic indicators point to the great importance of family businesses in the economy from several aspects<!--more-->: 80% of the world's businesses are family owned, concentrating a great economic power, succeed in business sustainability, employment, and business development services in the country and the region. Global indicators to countries, family businesses and their profile, research was conducted have a look at: <a href="http://familybusinessindex.com/">http://familybusinessindex.com/</a>

On the territory of the USA 60% of total US employment refers to the family business, 78% of all new vacancies and 65% of all wages paid. Research conducted by the Coles College of Business at Kennesaw State University:<a href="http://coles.kennesaw.edu/index.htm">http://coles.kennesaw.edu/index.htm</a>

European Commission carried out in 2008 study on family business / on EU MS, EEA (Iceland, Norway and Liechtenstein) CC (Turkey, Croatia, and the former Yugoslav Republic of Macedonia) on 2008.

Study found that across Europe (33 countries under analysis) there is not a single definition of “family business” which is widely and exclusively applied to every conceivable area, such as to public and policy discussions, to legal regulations, as an eligibility criterion for support services, and to the provision of statistical data and academic research. A total of 90 different definitions were identified, which mainly require major family influence on ownership and management/strategic control. Other characteristics used to differentiate family businesses from non-family businesses are the active involvement of family members in the enterprise’s everyday activities (i.e., the formal or informal employment of family members in non-managerial positions), the enterprise’s contribution to the family’s income generation, and intergenerational considerations (i.e., the intention to ensure the enterprise’s sustainability beyond the entrepreneur’s (professional) lifetime).  About 70-80 % of enterprises are family businesses and they account for about 40-50 % of employment.

Investigating our country, said that in Croatia family business as the main beneficiary of policy measures, i.e. agriculture, tourism and crafts. Within the existing legal framework regulating company law, they found in Croatia is no specific definition of a family business, only examples of very large companies which are run as family enterprises both in terms of the ownership structure as well as management of business processes. On the other hand, in Croatia are, as they said,  single proprietors and crafts which are not run as family businesses but are just a legal form of economic activity. Therefore, the legal framework recognises the family business in agriculture, catering and crafts as one of the possible legal forms in these sectors of economic activity. One-person enterprises are not necessarily family businesses. In summary, there are no accepted definitions of the family business in Croatia but there are different ways of understanding the concept.

Source: Overview of Family Business Relevant Issues Contract No. 30-CE-0164021/00-51, conducted on behalf of the European Commission, Enterprise and Industry Directorate-General, 2008. <a href="http://ec.europa.eu/enterprise">http://ec.europa.eu/enterprise</a>

Comparing with data source from EY (<a href="http://www.ey.com/GL/en/Home">www.ey.com/GL/en/Home</a>) family businesses account for more than two-thirds of all companies around the world and 50%–80% of employment in most countries. An estimated 70%-90% of global GDP annually is created by family businesses. Summary of researcing is the importance of family businesses to the global economy is undeniable.

More research available at: Family Enterprise Statistics from around the World, Family Firm Institute,

<a href="http://www.ffi.org/?page=GlobalDataPoints">www.ffi.org/?page=GlobalDataPoints</a>, accessed March 6, 2015

Source: www.nensi-radulovic.com