We have long argued that government should legislate to protect small and family businesses. We have also described, for instance in our Cambridge Paper Risk, reward and responsibility: limited liability and company reform, how:

'The biblical ideal for business organisation seems to lie in the business (farm) owned, managed and worked by the extended family, where every person lives 'under their own vine and fig tree'. This ensures a coincidence in the interests of owners, managers and employees, and maximises opportunities for creativity and participation. It also avoids undesirable ethical consequences arising from concentration of power, and maximises commonality of interests among those involved.'

Now, a new report by Barclays Wealth gives support to the family business model, exploring what makes them different and looking at what the wider business environment can learn from the unique set of values and approaches often adopted by them. Family Business: In Safe Hands? argues that the attributes of such family businesses mean they are well-placed to survive and even thrive in an economic downturn.

Among the most important advantages identified is their long-term perspective. 'Without a stock market listing,' the report suggests, 'private family businesses are insulated from the need to respond to the short-term demands of investors. They can adopt a more long-term, so-called 'patient capital' approach that could mean that they are better placed to ride out volatility than their listed peers.' Other advantages include steady leadership and a strong identity and vision shared by a close network of family members - all factors that may in fact help to reinforce the long-term perspective of the family business.

Family businesses also have a reputation for being strong supporters of the communities in which they operate, tending, for instance, to be slower to lay off people in a downturn than non-family businesses because there is a connection with their employees and communities. The structure and support system within and outside of the family business thus also gives it a competitive advantage over its non-family business counterparts.

According to some estimates, family-owned companies account for between 70 per cent and 90 percent of global GDP. In comparison, their contribution to UK GDP is estimated to be just 31 percent, despite their controlling around 65 percent of the 4.6m private sector companies in the UK and accounting for around 42% of private sector employment.† If the recent sharp downturn in the global economy and talk of finding a 'New Capitalism' is to result in lasting social reform, it seems we would all benefit from a revival of interest in the family business as an organisational form.

† UK figures from the Institute for Family Business, The UK Family Business Sector

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