Labor Productivity in the Palestinian Family Businesses

Abstract

The family businesses represent the majority of the private sector in the Palestinian economy. It is known that the labor productivity is supposed to be higher in family businesses compared to non-family business due to direct supervision and other aspects. Therefore, the general purpose of this research is to discuss this issue in general and to compare labor productivity in the Palestinian family industries with non-family industries. The study used various indicators to measure labor productivity such as, sales value per employee, cost of labor to sales ratio, and cost of goods sold value per employee. The aim is to indicate whether the merits of family business are reflected in producing higher labor productivity as expressed by different outputs. To accomplish that, a special questionnaire was used to collect the needed financial and quantitative data from a selected sample of fifty family businesses and all public corporations (20 firms) as non-family firms working in the industrial sector of the Palestinian economy. Thereafter, a t test was conducted to examine the stated hypotheses between the average means of outputs for the various groups of the study.The study found that the cost of labor in family business is less than in non-family industries, but the productivity is much higher in the non-family industries compared to family industries as expressed by the sales value per employee. In addition the difference between labor productivity of public corporations (non-family) and family industries is existed but is not decisive; and mainly it’s in favor to non-family industries, while there are no significant differences among the family business groups whether it is food or non-food industries.