Across the globe, there are more family-owned enterprises than any other type of company. Regardless of their size or legal form, they are defined as companies under significant family control—usually through majority ownership of the company’s capital, but occasionally also through multiple voting rights or pyramid structures. In the case of listed corporations, a blocking minority of 25 percent held by a single family or related families is often sufficient for the company to qualify as a family business. Owner-managed companies, i.e. those in which family members perform management duties, are a smaller sub-group within this broad definition of family businesses.

According to the Family Firm Institute of Boston, which largely follows this definition, in the second decade of the 21st century around two-thirds of all companies worldwide were family businesses, generating 70–90 percent of global gross national product (GNP) and providing 50–80 percent of jobs. These ratios are much higher in certain countries.1 Figures like these initially reflect the enormous significance of small businesses and micro-enterprises: “Mom and pop stores […] tend to be owned by mom and pop”2 and—statistically speaking—make up the majority of family businesses.

Family businesses as such are no better or worse than companies constituted in other ways, and are strongly represented in both dynamic and stagnating economies. Family businesses are trust-based, highly innovative entities in which employees, owners and management alike exhibit exceptionally high levels of loyalty and intrinsic motivation. They benefit from low transaction costs, good reputations, the mobilization of family resources, the transfer of knowledge and skills within the family, and a long-term perspective. Researchers with a different perspective, on the other hand, emphasize the lack of both transparency and efficiency in family businesses, in which insiders are free to act without external control and nepotism crowds out the principle of merit. They say that oligarchs have a tendency towards political corruption and “rent-seeking”. In their opinion, family businesses are conservative, averse to competition, and exhibit poor corporate governance.3

The advantages and disadvantages of family businesses certainly cannot be weighed up against each other wholesale, as they are visible only in individual cases. The objective of this study is thus not to pass judgement on the strengths and weaknesses of family businesses. Rather, it examines the hypothesis that the role of family businesses is a key distinguishing feature between the USA and UK on the one hand, and western and southern European countries on the other, between capital-market-driven Anglo-American capitalism and a model of capitalism in which not only social security schemes, but also family businesses play a bigger role.4 This study focuses in particular on the United States and Germany, which are the most important exponents of these disparate systems, and uses a long-term historical comparison to investigate the extent and the causes of the contrasting status that family businesses enjoy in these two countries.

The first step is to thoroughly examine the key differences between the two economies today, taking that as a basis to look at their differing historical developments. If we compare the proportion of family businesses to the total number of companies in both countries, we initially see that they are closely matched.

The figures published by the Family Firm Institute (Table 1) show a similar presence of family businesses in Germany and the US in 2014. In the categories “in percent of all companies” and “revenues in percent of gross domestic product”, Germany has a slight lead over the US and occupies the top position worldwide. When it comes to employees of family businesses as a share of all employees, the corresponding figures of 57 percent and 56 percent are virtually identical. On the basis of statistics published by the Mannheim Enterprise Panel (MUP) of the Centre for European Economic Research (ZEW) in 2014, the Foundation for Family Businesses calculated somewhat lower figures for Germany in 2013—91 percent (percentage of all companies) and 48 percent (revenue percentage)—while the employee percentage was the same, at 56 percent. The figure for owner-managed family businesses as a percentage of all companies in Germany was 87 percent.5