The social contribution of family businesses in the Netherlands

The research
Family businesses think in generations and strive for continuity. The focus is on the long-term perspective of investments, financial stability, stable employment, and efficient decision-making. Family businesses therefore often name a clear long-term goal in their mission and vision, support (local) social organizations and reinvest achieved results in the company. Financial stability and prudence, where debt and debt are concerned, increase the chances of withstanding economic crises. International quantitative scientific research confirms the qualitative picture that exists and adds to it the extent of the contribution to society. Quantitative research on family businesses in the Netherlands is limited. The main reason is that only recently have family businesses been identifiable in data available at Statistics Netherlands. From this new data, quantitative insights emerge that confirm the international picture. For a complete picture of the ecosystem of businesses of which family businesses are a part, further research is needed. In this study, we chart the contribution of family businesses in the Netherlands.

Results
Family businesses play an important role in promoting macroeconomic stability, having a dampening effect on economic fluctuations. Because of their specific structure and governance, family businesses are more agile and can make quicker adjustments. This results in lower social costs during times of crisis, such as fewer layoffs, less reliance on government regulations and fewer bankruptcies. The commitment to continuity, which stems from deep family involvement in the business and community, leads to choices focused on long-term goals rather than mere profit maximization, which promotes employee job security. Family businesses are often located in regions with strong interconnectedness, where they contribute to charities and sponsor local initiatives. They adopt financially conservative policies with a focus on long-term orientation, resulting in high solvency and liquidity. Although family businesses are more labor intensive, lowering productivity per employee, they contribute to stable employment.

Business succession schemes, as present in most EU countries, effectively support the continuity of family businesses. In the Netherlands, measures have been taken to make these schemes more effective and efficient, but the adjustment places our country below the European average. A more uneven playing field may lead to less tax revenue and reduced social benefits.

Methods
The study is based on scientific literature, interviews with experts, a survey of several family businesses, and econometric analysis on firm-level data (from Statistics Netherlands) to measure economic effects and contributions.