How Many Family Businesses Are There Really and Does ICT and Innovation Improve Their Performance?

Abstract

Depending on the source, a reader may be left with the impression that Family Businesses typically account for between 75% and 95% of all enterprises operating in an economy. This study, using official structural business statistics from Ireland, suggests that in fact Family Businesses may account for a considerably smaller share of the business economy; something closer to 46%. This paper attempts to explain how such a discrepancies can arise. Using the Annual Services Inquiry (CSO, 2007a) compiled by the Central Statistics Office (CSO) as the anchor dataset, micro data are linked to the e-Commerce and ICT survey (CSO, 2006b), Community Innovation Survey (CSO, 2008b) and VAT registrations datasets in order to determine whether labour productivity in Family Businesses (FBs) is significantly different to that of Non-Family Businesses (NFBs) and if Information and Communication Technologies (ICT) or innovation has an impact. The paper also highlights the significant impact that Foreign Direct Investment makes to the Irish economy. This analysis is particularly relevant for a small open economy like Ireland where 31% of traded services GVA and 15% of employment is generated by multinational enterprises.