From the Molson Coors Brewing Company founded in 1786 to the corner coffee shop: 80% of all companies are family-owned and according to some estimates account for 60% of Canada’s GDP per year.
Family Enterprise Xchange, an independent association of family businesses and their professional advisors, commissioned the Conference Board of Canada, to test the assumption that ‘family enterprises matter’ by analyzing available statistical data. The results of the study were resounding:
- Family businesses are the ‘backbone’ of the Canadian economy. They account for nearly 50% of private sector domestic product and nearly 7 million jobs across the country;
- Family businesses outperform their peers. Between 2007 and 2013, total revenues grew 15% on average among family enterprises compared to 14% with other firms;
- Family businesses also tend to outlive other enterprises. 70% of family firms that were operating in 2007 still existed in 2013 compared to 65% of other firms.
The findings are consistent with previous research by the Johnston Centre (formerly the Clarkson Centre for Business Ethics), which documented both the strong performance and longevity of family businesses.
In order to support the performance and growth of family businesses, the report calls for further research on their unique ownership structures and governance models, as well as on topics such as leadership, succession planning and demographic trends.
In the spring of 2019, the Johnston Centre was established to study board effectiveness and governance in under-served sectors including family enterprise, both private and public. Building on our previous work in developing an alternate governance ranking system for family firms, the Johnston Centre will seek to understand the foundations of effective family governance systems and ask: what does good governance look like in private and public family firms?
Given the economic importance of family businesses, we concur with the Family Enterprise Xchange and Conference Board of Canada that it is incumbent upon the research, policy and management communities to understand family firms in their own right.
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