A new study by Aalto University challenges several persistent myths about Finnish family firms. Based on extensive register data from 2006–2022, Professor of Ownership Samuli Knüpfer provides a comprehensive picture of family firms and their owners. The findings show that, on average, family firms are more profitable and financially resilient than other firms – and invest more.
Family firms account for 73 per cent of firms in Finland. They generate 42 per cent of total employment, 31 per cent of turnover, and 22 per cent of firms’ total assets. When firms owned by foreign entities or the public sector are excluded, the economic role of family firms becomes even more pronounced.
‘When we talk about the Finnish business sector, attention often focuses on large listed companies. They are of course important but represent only a small part of the overall picture. Most Finnish firms are family firms, and a substantial share of economic activity takes place in them,’ Knüpfer says.
Family firms are often seen as economically marginal because many of them are small. The study shows, however, that while many family firms employ only a few people, their combined contribution to employment and regional vitality is significant.
Family firms are also well represented among large companies: around one fifth of firms employing more than 500 people are family-owned.
They are particularly important employers in primary activities (83 per cent of employment), construction (65 per cent), accommodation and food services (52 per cent), trade (49 per cent), and other service industries (69 per cent).
Their importance is greatest outside the Helsinki metropolitan area, where family firms account for nearly half of total employment. Regionally, their role is especially strong in Åland, Päijät-Häme, Central Ostrobothnia, South Ostrobothnia, North Savo, and North Karelia.
Another common assumption is that family firms are inefficient or poorly managed. The evidence does not support this view. On average, family firms are more profitable than other firms, particularly due to lighter balance sheets and lower personnel costs.
Family firms are also often described as risk-averse and reluctant to invest. While they rely less on debt financing, the study finds that they nevertheless invest more than other firms.
‘Family firm owners are often assumed to prioritise survival across generations, leading to excessive caution. Our results suggest otherwise. Family firms may invest more precisely because their owners take a longer-term view,’ Knüpfer notes.
The study also identifies challenges. Growth and internationalisation are weaker among smaller family firms than among other firms of similar size. According to Knüpfer, this points to growth constraints that should be recognised in policy design.
‘Smaller family firms need support in making the leap to growth. Public policy has an important role to play here,’ he says.
The picture is different among larger family firms. Family firms employing at least 50 people grow faster and are more likely to export than other firms of comparable size.
‘Finland’s lack of economic growth is a serious concern. Among family firms, there are many successful growth stories. There is much to learn from these companies,’ Knüpfer says.
The study also provides unusually detailed evidence on family firm owners. Around 135,000 individuals – roughly two per cent of the Finnish population – own shares in family firms. Despite their small number, their economic contribution is substantial: in 2022, they accounted for around 11 per cent of all personal income tax revenues.
These findings complement Knüpfer’s earlier research on owners of privately held firms and provide internationally rare, granular evidence on the role of ownership in the tax base.
‘Despite their importance, we have known surprisingly little about these owners. With this data, their contribution can now be shown with concrete figures,’ Knüpfer says.
The study Anatomy of family firms in Finland is based on comprehensive register data from Statistics Finland, the Finnish Tax Administration, the Finnish Patent and Registration Office, and the Digital and Population Data Services Agency. It covers all Finnish limited liability companies with turnover, assets, and at least one employee. The research was supported by the Jenny and Antti Wihuri Foundation and The Finnish Family Firms Association.
The research material: Anatomy of family firms in Finland.
OP Financial Group Research Foundation may award individuals who have significantly promoted economic research in fields supported by the foundation
The first comprehensive study of Finnish owners of privately held firms found, among other things, that only three per cent of the population own shares in these companies.
