Corporate Landscapes in Former East and West German States Are Becoming More and More Alike

The corporate landscape of family-run businesses in East Germany is becoming increasingly similar to that of the former West German states. Three decades after the fall of the Berlin Wall and the subsequent reunification, the composition of family-run firms in East Germany and the situation in West Germany are growing more and more alike. This is the key finding of a study carried out by the ZEW – Leibniz Centre for European Economic Research in Mannheim on behalf of the Foundation for Family Businesses.

As the study shows, the share of family-run businesses in the overall number of large companies experienced a particularly strong growth. In East Germany, the share of family businesses among companies with more than 500 employees rose from seven per cent in 1993 to 18 per cent in 2017 – thereby reaching the same value recorded in the former West German states. The share of family businesses among companies with 250 to 499 employees even climbed from 17 per cent to 27 per cent. In the former West Germany, only 26 per cent of companies of this size are family businesses.

In addition, the study shows that there is an increasing number of East German family businesses that are run by local owners. By contrast, the share of family-run companies whose owners are from West Germany decreased in the period between 2001 and 2017. While almost one third of family companies with at least 250 employees were in the hands of West German business owners, this figure fell to ten per cent in 2017.

With a value of 92 per cent, the share of family run-businesses is higher in East Germany than it is in the states that were formerly part of West Germany. The federal states with the highest shares of family businesses are Thuringia (93 per cent), Saxony-Anhalt, Saxony, Mecklenburg-Vorpommern, Rhineland-Palatinate and Brandenburg (92 per cent each).

In spring 2019, ZEW published a study on the economic importance of family businesses carried out on behalf of the Foundation for Family Businesses. In this study, the researchers found that family-run businesses make a decisive contribution to economic stability and employ almost 60 per cent of all workers in the private sector.