'Running in the Family': The Evolution of Ownership, Control, and Performance in German Family-Owned Firms, 1903-2003

Abstract

In this study we analyze the evolution of ownership, control, and performance in German founding-family-owned firms over the last century. We employ a hand-collected matched sample of German stock companies founded before World War I and still in existence in 2003. Comparing family-owned and non-family-owned firms over the 100-year time-span, we are able to analyze a variety of variables including ownership, control, industries, bank relationships and performance, as well as the impact of intergenerational control transfers. We find that families are slow to give up ownership, and control of family businesses remains strong even after several generations. Family firms seem to outperform non-family firms in terms of operating performance, but performance declines over the generations.

Keywords: Family firms, performance, ownership, control, German stock markets

JEL Classification: G32, N23, N24