Big business could learn survival lessons from family businesses

Family businesses are less likely to fail than big business because they are usually made up of a well functioning and diverse board of directors who are able to advise effectively. A report published today by researchers from the University of Leeds, Imperial College Business School and Durham University Business School shows that family businesses were less likely to go bankrupt because they are able to recruit and maintain an experienced, diverse and knowledgeable board of directors. Professor Nick Wilson of the Credit Management Research Centre at Leeds University Business School said: “This is one of the first studies to identify the board and ownership structure of private family firms in the UK and to track their survival rates relative to other firms”. The researchers also found that 80 percent of family owned businesses are more gender balanced, having at least one female director. Professor Mike Wright, Director of the Centre for Management Buyout Research at Imperial College the Business School, said: “Running a successful business of any size is no easy task and this year we have already seen some high-profile businesses such as Comet being forced to close. Family businesses could provide lessons to larger firms, as our findings show that a more diverse and experienced board of directors, which are prevalent in family firms, could be related to reducing failures in businesses. The board of directors in a company provide advice and direction to management.