Issued every two years, the newly published 2023 EY and University of St.Gallen Family Business Index ranks the world’s largest family businesses by revenue. This year’s Index confirms the significant contribution these businesses make to the global economy, employing 24.5 million people worldwide and generating $8.02 trillion in revenue.
Nearly half of the Index’s new entrants for 2023 are in EMEIA (Europe, the Middle East, India and Africa), with family enterprises based in the Americas and Asia-Pacific evenly splitting the remaining 53 per cent. New companies appearing on the Index are 62 per cent more likely to be publicly listed rather than private. However, the enduring nature of family enterprise prevails in the Index’s 500 businesses, 76 per cent of whom have been operating for over 50 years.
Consumer Products Still in the Lead
With its stability and consistency, the Consumer Products category accounts for the greatest share of the world’s largest 500 family enterprises, at 37 per cent. This category includes Walmart, which remains the world leader in Consumer Products by revenue for both family and non-family-owned firms. The United States hosts the most family businesses in this group, followed by Germany and France, respectively.
Family enterprises that engage in Advanced Manufacturing & Mobility represent the second-largest class of companies in the Index. But in 2023, the businesses included from this category also saw a 4 per cent increase from 2021 and now account for 29 per cent of the top 500 family firms. Germany is home to the most Advanced Manufacturing & Mobility businesses in the Index, ahead of the United States and Switzerland, which ranks third. Bayerische Motoren Werke AG (BMW) is the top revenue producer of all family-owned companies in this class.
Resilience when Confronted by Disruption
According to the 2023 EY and University of St.Gallen Family Business Index findings, the largest 500 family businesses are growing faster than the global economy. Despite the economic slowdown affecting businesses worldwide, the $8.02 trillion in revenue generated by the Index’s 500 family enterprises represents a 10 per cent increase since 2021.
The United States and Germany are still the only two countries with family enterprises that generate annual revenue of $100 billion or more, and the United States remains the Index’s leading individual jurisdiction by revenue.
The composition of nations whose family enterprises generate between $50 and $100 billion is far more diverse, with firms in Asia and Europe accounting for most of this group.
Traditions Continue in Europe
The period between the end of the Second World War in 1945 and 1988 gave rise to the Index’s greatest number of family enterprises. Yet, 31 per cent of all the Index’s family firms are more than a century old, with Europe home to the majority at 57 per cent. The 412-year-old Takenaka Corporation of Japan, founded in 1610, is the oldest family enterprise on the Index, edging out Germany’s Merck KGaA, founded in 1668.
Of the 11 enterprises founded since 2000 that appear in the Index, most are based in Asia or Europe. However, Mexico is the only nation with two entries established since the century’s turn. Of the companies founded since 2000 and beyond, Belgium’s Anheuser-Busch InBev SA generates the most revenue, with $54.3 Billion.
Family enterprises maintain a long-standing presence in Europe, with Germany accounting for 78 of the Index’s companies, the second-highest contribution by a nation. Europe’s $3.05 trillion in revenue marks the first time family businesses in that region have surpassed $3 trillion annually.
A little more than half of the companies in the Index are based in EMEIA, with a combined revenue of $3.46 trillion, representing over 43 per cent of the Index’s total value.
India climbed into the Index’s top 10 largest family enterprises for the first time in 2023 and is the fourth largest combined revenue contributor with $365 billion. Reliance Industries leads India’s family enterprises in annual revenue, generating $94 billion.
The number of companies based in Asia-Pacific experienced a 6.8 per cent increase from 2021, perpetuating a growth trend that has continued since the Index’s first edition in 2015. Moreover, companies from Asia-Pacific collectively passed the $1 trillion barrier for the first time in the Index’s history. Hong Kong hosts the highest number of family enterprises in the region, with 18, while South Korea still accounts for the most significant percentage of Asia-Pacific’s 1.16 trillion revenue, at 30 per cent.
The United States contributed close to one-quarter of the Index’s featured companies and accounted for 34 per cent of reported revenue. Of the Index’s top ten earning family businesses, seven are based in the United States. Despite having significantly fewer businesses on the Index than EMEIA, the Americas almost matched that region’s collective revenue, with $3.4 trillion.
Demographics and Diversity
Almost half of the companies appearing in the Index have a family member serving as CEO, confirming that families are active participants in the enterprises they own and manage. Although 19 per cent of companies have a next-generation member on their board, the average age of family board members has increased to 62 years old, slightly up from 60 in 2021.
Despite making progress in their diversity and inclusion practices, the 2023 Index reveals that family enterprises still have work to do. Only 29 companies have a female CEO, representing a slight increase from 2021. Of the largest 500 businesses globally, women hold just 23 per cent of board seats and represent only 3.5 per cent of board members in the Index’s top 10 enterprises.
The findings of the 2023 Index further underscore the unique capabilities family enterprises leverage when faced with complex challenges, even those as extraordinary as a global pandemic. As all businesses confront the prospect of a worldwide economic slowdown in the years ahead, their agility and ability to adapt will determine whether they successfully navigate the oncoming market turbulence. However, the longevity and achievements of enterprises featured in the 2023 EY and University of St.Gallen Family Business Index suggest they are equipped for the task.