The social contribution of family businesses in the Netherlands – FBNed and Stichting Familie Onderneming

FBNed and Stichting Familie Onderneming (the Family Enterprise Foundation) commissioned a study to map contributions made by family businesses in the Netherlands. The study was conducted by SEO Amsterdam Economics and can be found in English in the policy – report section of the EFB website.

For more information on the study visit FBNed’s website.

The following press release has been translated from Dutch to English.

Scientific research shows: family businesses increase economic stability of the Netherlands

  • Focus on future-proofing instead of profit maximisation
  • Good for 1 in 3 jobs and higher job security during recessions
  • Lower social costs
  • Greater connectedness in regions
  • More successful in translating innovative ideas into practice
  • Good ‘staying power’ important for family businesses as main stay of Dutch economy

Amsterdam, 15 March 2024 – Family businesses increase the economic stability of the Netherlands. They also reduce the effects of economic dips, unemployment and bankruptcies, according to independent scientific research by SEO Economic Research. Family businesses are not about profit maximisation, but about the healthy future of the company. This long-term thinking ensures that family businesses handle risks more carefully, have enough money in the bank to absorb setbacks, continue to innovate and make important contributions to their region. This also brings an advantage for employees: they have higher job security with a family business in difficult times.

Family businesses are of great importance to the Netherlands. Of the 490,000 companies with employees, 300,000 are family businesses. And almost one in three Dutch people work there. They enhance the economic stability of the Netherlands. The long-term perspective of family businesses, which focuses on the interests of all stakeholders, ensures long-term commitment of owners, close ties between family and employees, strong regional ties, continuous investment in innovation and high financial stability. This concludes SEO Economic Research, affiliated with the University of Amsterdam, in the research report ‘The social contribution of family businesses in focus’ published today.

“Family businesses are an important pillar of Dutch society. They increase macroeconomic stability and dampen the effects of economic fluctuations through a higher degree of liquidity and solvency. Resulting in lower social costs,” states Bas ter Weel, managing director of SEO and professor of economics at the University of Amsterdam. “Our research shows that family businesses are more stable in uncertain times. We should be careful about that.”

Good business location and climate is essential for social role – A good establishment and climate for family businesses remains important. Not only for the economy, but also for society. Family businesses are often located in regions with a high degree of interconnectedness. More family businesses operate in close-knit communities. Among other things, they contribute to this interconnectedness through contributions to charities and as sponsors of activities in the region. However, further research is needed to determine the exact effect of family businesses on community connectedness.

Corona support for family businesses was 18 percent lower

When the market changes, family businesses adjust more quickly because the owners themselves are at the helm. International comparative research shows that family businesses are more likely to keep their heads above water during crises and recessions and maintain employment. This also became visible in the Netherlands during corona times. During the lockdowns, government support to family businesses was 18 percent lower than support to non-family businesses, such as listed companies and companies owned by private investors. SEO explains the lower social costs of family firms by the distinctive characteristics of the family business. Thanks to their larger financial buffer, they needed less government support in corona times to pay their employees, keep them employed and pay fixed expenses. Family firms therefore kept more people employed during corona times.

Higher job security

Family businesses feel closely involved with their employees and the environment. This is because they focus on the long-term healthy future of the company and they are aware of their social responsibility as an employer in the region. Family businesses are therefore less likely to dismiss employees than non-family businesses. They are also less likely to relocate their business to another region or abroad.

Practical innovation: investing with greater returns

Although Dutch family businesses make less use of available innovation subsidies, international comparative research shows that family businesses do succeed more often in putting innovative ideas into practice, such as a new product or a new process that reduces costs. Family businesses are more likely to innovate in smaller steps. In other words, practical innovation.

“We notice that the importance of the family business is undervalued in the Netherlands,” said Albert Jan Thomassen, director of FBNed | Family Businesses Netherlands. “Most attention is paid to the large listed companies. This loses sight of the role of the 300,000 family businesses in the Netherlands. They ensure economic and social stability in the Netherlands. The long-term perspective of family businesses, which focuses on the interests of not only shareholders, but all stakeholders, ensures the long-term involvement of a stable group of owners, a close relationship between family and employees, strong regional ties and continuous investment in innovation.”

Characteristics family businesses

  • Focus on long-term and continuity
  • Crisis-proof thanks to high solvency
  • Strong commitment of entrepreneurs to business and environment
  • Decisive in the event of market developments and crises
  • Investments in own regions
  • Fewer bankruptcies and fewer job losses during recessions and crises
  • Greater job and income security

500 largest companies in the Netherlands by ownership

  • Family-owned companies (38%)
  • Companies with director-major shareholders (15%)
  • Companies owned by private investors (15%)
  • Listed companies (11%)
  • Cooperatives (9%)
  • State-owned companies (5%)
  • Other (8%)