Italian Small Family Businesses Grow, Finally Opening up to External Managers

IN ITS NINTH EDITION, THE AUB OBSERVATORY, PRESENTED TODAY AT PALAZZO MEZZANOTTE, HIGHLIGHTS THE INCLUSION OF NON FAMILY LEADERS EVEN IN SMALLER BUSINESSES, A CHANGE THAT WILL BEAR FRUIT IN THE COMING YEARS

The process of opening up family businesses to external managers is beginning to involve even the smallest companies, according to data from the ninth edition of the AUB Observatory on Italian family businesses, edited by Guido Corbetta, Fabio Quarato and Alessandro Minichilli of Bocconi University, presented today at Palazzo Mezzanotte.
 
In the last two years, out of 253 cases of succession in an Italian family business with a turnover between 20 and 50 million euros, 59 (23.3%) have changed from a family leader to a non-family leader. “These numbers are already significant”, says research coordinator Guido Corbetta, “and follow, a few years later, a process already started by larger companies, that has proven to pay off in economic and financial terms”.
 
In fact, opening up to non-family managers and board members is correlated with positive aspects, such as growth in size and export. Even the old saying that "the first generation builds, the second generation consolidates and the third one destroys" can be mitigated by the presence of non-family board members. If, in fact, it remains true that third-generation family businesses suffer in terms of profitability, this relationship is, nonetheless, weaker when companies are larger and when there are external board members.
 
The AUB Observatory's findings confirm that family businesses create employment (+20.1% in the last six years, followed by +14.4% for cooperatives and consortia, +5.7% for branches of foreign companies, +1.4% for coalitions, -8.7% for companies controlled by funds and -12.3% for state-owned companies), grow more than the rest (+47.2% in the last 10 years, compared to 37.8% for other enterprises).
 
Within the family businesses universe, two particularly high performing sub-sets are those of family businesses listed on the stock exchange and those with a turnover of more than 500 million euros (the Over 500s).
 
Listed family businesses are larger than average (45% have a turnover in excess of 250 million euros, compared to 7% for unlisted family businesses), have a longer life expectancy (28% are over 50 years old, compared to 10% of the others), grew 20 percentage points more than the others in the last 10 years and are much more inclined to acquisitions (76.9% vs. 4.6%), foreign direct investment (88% vs. 28%), and export more.
 
The Over 500s record more structured leadership models: there is one single administrator in 5.2% of the cases, compared to 26.6% of the totality of family businesses; there is a non-family leader in 32.2% of the Over 500s, compared to 12.3% for the rest. They are also ten times more inclined to make acquisitions and are champions of internationalization: 74.7% of them have made a foreign direct investment and 38.4% export more than 70% of their production.

by Fabio Todesco