The world’s 500 largest family enterprises grew their revenue by 10% amid ongoing economic slowdown, generating US$8.02 trillion ($10.72 trillion) in revenues, according to the 2023 EY and University of St.Gallen Family Business Index.
The study, which ranks 500 of the largest family businesses in the world by revenue and is issued every two years, says that family businesses employ 24.5 million people worldwide across 47 jurisdictions, high enough to be the third largest national economy by revenue behind the US and China.
Of these 500 family businesses, 17 family enterprises in Southeast Asia are on the list, including two from Singapore and four from Malaysia. Meanwhile, the contribution of Asia-Pacific family businesses to the list has been increasing ever since the first edition of the index in 2015, from 12% to 16% this year.
The study notes that longevity and stability continues to be a staple among the companies listed on the 2023 index, as 76% have been around for more than 50 years, and nearly a third are more than a century old.
But the legacy of these family businesses will face threats, should they not carry out succession plans soon. In Southeast Asia, the average age of board members across these family enterprises is 62 years old.
Low Bek Teng, EY Asean Family Enterprise Leader says: “Having board members of an average age of 62 years highlights the need for Southeast Asia’s family enterprises to examine board renewal and transition to the younger generation – and this needs to happen within the next few years. As family enterprises grow in size and complexity, a good succession plan becomes an imperative.”
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He adds that current economic challenges from geopolitical risks, rising inflation and interest rates means that family enterprises may need to take immediate and additional steps to protect the value of their assets and investments.
“They will need to understand the relevant risks and how each of these risks may impact their businesses,” says Low. “Bringing in the next generation to work and learn alongside the current board and management will help the younger team better appreciate the intricacies of the business.”
The study also notes that while these successful family enterprises are recognised for being agile, innovative and purposeful, they have some way to go with regards to gender parity.
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Globally, around 6% of these family businesses have a female CEO, and women only hold 23% of all board seats.
North America and Europe stand out on the index with female CEOs, but the percentage only amounts to 7%, while Europe leads the way with women occupying 25% of family-held board seats, considerably above the global average of 20%.
Helena Robertsson, EY Global Family Enterprise Leader, says: “As we anticipate a potential slowdown in global economic growth for the year ahead, the long-term perspective of these companies and the desire to further a legacy will be critical drivers for maintaining resiliency and ensuring a strong succession plan is in place. I especially look forward to seeing how the next generation will further focus on investing in technology and diversifying the face of boards while maintaining significant contributions to the global economy."
