Family firms

Basic facts about Norwegian family firms

Family-ownership is the most prevalent way of organizing private enterprise in Norway. 70% of Norwegian companies are controlled by families in the sense that one family owns 50 percent or more of the firm’s equity.

Family firms in the Norwegian economy 

Figure 1 shows how family firms contribute to the Norwegian economy. They employ 39% of individuals in the Norwegian work force and account for 27% of aggregate sales, and own 17% of total corporate assets.

Figure 1 Family firms in the Norwegian economy.jpg

Family firms can be found in all sectors of the economy, but are more common in industries that use more labor and fewer fixed assets. For example, 70% of firms in services are family firms compared with 53% of firms in mining and oil (Figure 2).

Figure 2 Percentage of family firms across industries.jpg

Size and age characteristics of family firms?

Family firms tend to be smaller than the average nonfamily firm but a small group of family firms are very large (Figure 3). 

Basic facts_figure3.jpg

Table 1 displays basic age and size statistics for three different categories of family firms as well as nonfamily firms.

Basic facts about family firms table 1.jpg

Panel A shows the relatively small size of family firms. The average nonfamily firm is 6.5 times larger than the average family firm in terms of sales (128.0 vs. 20.3 million kr.), 12 times larger in terms of assets (339.6 vs. 29.8 million kr.), and 3.5 times larger in terms of employees (38.2 vs. 11.1).

The tables also displays the skewed size distribution of family firms. Large family firms are almost as large as the average nonfamily firm, whereas owner-manager sole entrepreneurships are almost half the size of the average firm.

Panel B shows that the small size of sole entrepreneurships is (partly) explained by their very young age. The large family firms, on the other hands, are several years older than the average firm. Overall, family and nonfamily firms are of similar age—almost 12 years.

Panel C shows that the average family firm has somewhat lower sales growth than nonfamily firms (5.7% vs. 6.5%) but somewhat higher asset growth (5.4% vs. 3.6%). Sole entrepreneurships growth very fast (over 10%) have very high growth rates while large family firms grow a little below average.

The table also shows that family firms are much more profitable than nonfamily firms, when profitability is measured in terms of return on assets (5.0% vs. 0.6%). Such profitability of family firms is often found in the data and may have several explanations.

You can find more basic facts about Norwegian family firms here and here.