The FD Gazelle list, the ranking of fastest-growing companies compiled by Het Financieele Dagblad and Company.info, includes around a dozen family-owned companies. All companies that increased their turnover by at least 20% in the past three financial years receive an FD Gazelle Award. There appear to be many myths about family-owned companies. A widespread myth is that family-owned companies are alleged to be so conservative and eager to stick to existing products, markets and processes that there is little room for innovation. As a result, it is said, family-owned companies price themselves out of the market and bankruptcy is just a matter of time for them. Recent research has refuted those myths: these companies are both more innovative and more ambitious in committing investments to creating innovation.
The overwhelming dominance of family-owned companies in the Dutch and global economy still comes as a surprise to many people. They are astonished to learn that 70 percent of all companies with employees in the Netherlands are a family-owned company (Statistics Netherlands (CBS), 2017). FBNed is the platform that supports family-owned companies in their operations and entrepreneurial issues. By contrast to the myth, research conducted by Nyenrode Business University has shown that family-owned companies are no less innovative than other types of companies. For instance, over 62 percent of all family-owned companies have launched at least one new product or service in the market in the past three years. Forward-looking family-owned companies that introduced innovations to the market in the past three years achieved 14.6 percent of their turnover in 2016 from those new products or services. These family-owned companies spend an average of 4.9 percent of their turnover on research & development and this percentage has risen strongly at over 1/3rd of the companies.
Limitations in innovation
The Nyenrode research, conducted in 2017 in conjunction with ING and NPM Capital, shows that the availability of talented employees is the main factor limiting innovation at Dutch family-owned companies. They are also restricted by the availability of capital: the owners’ family capital is locked into the family-owned company. Over 32 percent of family-owned companies would be more innovative if they had more financial resources available to them. The innovative potential of family-owned companies can therefore clearly be limited by this. Accordingly, innovating family-owned companies are increasingly entering into joint ventures with or acquiring other companies. More and more, they obtain advice and knowledge by appointing an Advisory Board or Supervisory Board and work with customers, with universities and universities of applied science as well as with public educational institutions.
Owners of family-owned companies tend to be more open to innovation strategies than owners of non-family-owned companies. That may be a major reason why family-owned companies, despite their limited resources, are perfectly able to compete with non-family-owned companies in terms of innovation. Owners of family-owned companies often share the same views on innovation and support the innovation policy in full, and to a significantly greater extent than owners of non-family-owned companies, claims the Nyenrode research.
