Higher level of affinity for family business in Ireland

April 10, 2024

Nearly three quarters of third level students who come from a family business background believe that the next CEO of the firm will be a family member, according to a study on succession carried out by Dublin City University in association with AIB.

The study points to an unusually high level of affinity for involvement in family business among Irish participants compared to the global picture.

Despite the preponderance of family businesses globally, something of a “succession crisis” is believed to have emerged, with studies suggesting that succession intentions among next-generation family business members are low.

This is understood to be most likely as a result of improved labour markets presenting would-be successors with more choice in the world today.

However, Ireland is considered to have largely bucked the global trend on this front with almost half of respondents saying they had seriously thought about taking over the family business at some point.

40% said they had “strong intentions” of becoming a successor, with men twice as likely as their female counterparts to express those sentiments.

When questioned about determining factors in choosing the next line, “level of interest” in the business is believed to most influence the choice of successor with “order of birth” the least influential.

While only around 15% of participants said they held financial ownership in their family business, 39% of next generation members reported a high degree of “psychological ownership” of the business.

Family businesses here represent nearly two thirds of all firms and employ 940,000 people, the study claims.

“Family businesses are the bedrock of economies and communities, exercising the dynastic will to build strong businesses and survive the social and economic crises that often crush non-family businesses,” Dr Eric Clinton, Director of the DCU National Centre for Family Business said.

“Despite this prominence, a global succession crisis has recently emerged, but not for the island of Ireland. Family businesses are the bedrock of economies and communities, exercising the dynastic will to build strong businesses and survive the social and economic crises that often crush non-family businesses,” he said.

“Despite this prominence, a global succession crisis has recently emerged, but not for the island of Ireland,” he added.

Article Source – Higher level of affinity for family business in Ireland – DCU/AIB study – RTE

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