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INSEAD Publishes Research on Family-backed Enterprises in Europe

Survey of 121 families reveals best practices
Significant proficiency gap between second and third generation family owners
First and second generation families outperform in terms of Family Ownership & Succession scores

INSEAD Global Private Equity Initiative
Tuesday, February 4, 2020

INSEAD’s Global Private Equity Initiative (GPEI) (“INSEAD”) today announced the release of new research on family-backed enterprises. The Institutionalization of Family Firms, Europe examines how institutionalization can help European family-owned businesses secure long-term sustainability, unlock growth, and face challenges such as family ownership and succession planning, as well as access to capital.

Companies that are owned and controlled by families are the cornerstone of European economic activity, representing 70%-80% of all business enterprises and 40%-50% of employment.[i] As incubators of entrepreneurial culture, these businesses act as catalysts of widespread growth and have a profound impact at local and regional levels. This report explores how institutionalization can help a family firm achieve sustainable growth, whilst also considering the nature of the family firm and private equity firm partnership, and how it can support sustainable growth and value-creation.

“Understanding how family businesses have continued to adapt over generations to the fast-changing business realities on the ground and sharing their lessons with those entrepreneurs and families at the beginning of this journey, will continue to drive our research agenda in the coming years” said Claudia Zeisberger, Senior Affiliate Professor of Entrepreneurship & Family Enterprise at INSEAD. 

INSEAD’s study surveyed 121 family businesses and interviewed select leading private equity firms to further understanding of how institutionalization, defined as the degree to which process driven decision-making and core family values are incorporated into a firm’s governance and day-to-day operations, can help a family firm achieve sustainable growth.  

The research found that the most significant increase in institutionalization score, termed “the proficiency gap”, is between firms led by 2nd generation family members and those in their 3rd generation and beyond. According to this, the study categorized companies in two distinct groups: ‘Ascendants’ (1st or 2nd generation family firms) and ‘Champions’ (firms in the 3rd or 4th generation or older). The research found that the older ‘Champions’ outperformed ‘Ascendants’ on five out of the six measures of institutionalization assessed in the study. The three greatest challenges that led to greater proficiency gaps were shown to be issues relating to intangible family assets, corporate governance and leadership, and organizational design. However, Champions underperformed Ascendants in terms of “Family Ownership & Succession”, underlining how important this attribute is along the institutionalization journey.

This report is the latest in a series of studies led by INSEAD over the past four years, including a survey of 123 family firms in Asia-Pacific and the Middle East (The Institutionalization of Family Firms – From Asia-Pacific to the Middle East) and a survey of 131 family-backed Enterprises in Latin America (The Institutionalization of Family Firms, Latin America).

Whilst the European sample had a significantly higher proportion of family firms in the 4th generation or older, overall the level of institutionalization in family firms increases over time, irrespective of location.


About INSEAD’s Global Private Equity Initiative (GPEI)

The Global Private Equity Initiative (GPEI) drives teaching, research and events in the field of private equity and related alternative investments at INSEAD. It was launched in 2009 to combine the rigour and reach of the school’s research capabilities with the talents of global professionals in the private equity industry. The GPEI aims to enhance the productivity of the capital deployed in this asset class and focuses attention on newer areas shaping the industry such as impact investing and operational value creation, and specific groups of LPs like family offices and sovereign wealth funds.  


[i] Austrian Institute for SME Research (2008). Overview of Family Business Relevant Issues. Study commissioned by the European Commission. Available at: