Family businesses can play a greater role in driving economic growth
FAMILY BUSINESSES, ranging from modest local community shops to large corporations, are fundamental pillars of any society. At the core of these businesses is a unique blend of family ties and entrepreneurial expertise that often set them apart from their non-family counterparts.
These enterprises, which are often deeply rooted in their local communities, are major contributors to job creation. Furthermore, they often support community initiatives such as the sponsorship of events.
Of significance is the contribution of family businesses to economic growth. According to development economist Dr Nelson ‘Chris’ Stokes, it is estimated that the total economic impact of family businesses on global Gross Domestic Product (GDP) is more than 70 per cent and that in most countries, family businesses represent an estimated two-thirds or more of all businesses.
“Studies in the United States on the impact of family-owned businesses on the economy highlight that economic growth is maximised when an economy includes a balanced mix of family and non-family SMEs [small and medium-sized enterprises]. Family-owned businesses promote a broader base of economic activity, reaching the small community level. In addition, family-owned businesses play an important role in local community development, with business leaders also playing the role of community leaders and investing in the development of the community outside of the direct business interests,” he said.
Dr Stokes further highlighted that “family-owned businesses are a crucial infrastructure for the development of business skills and the financing of new business ideas outside of the formal financial system”.
Empty’s Groceries, formerly Riverside Groceries, located in Trinityville, St Thomas, has been a major landmark in the community. Operating for 43 years, the business is being managed by a second generation of the family.
“I’ve been running it for the past three years,” said Jahdine Empty, niece of the first proprietor who passed away in 2021. She shared that she grew up with her aunt and used to help her with the business. Her aunt’s children live overseas so she continued the business. She hopes that one day, her son will take over from her.
In addition to the grocery business, there is a bar and a retail outlet for 25and 30-pound cooking gas cylinders on the same premises. And as a result of recently obtaining a loan from JN Bank Small Business Loans, she was able to increase her stock. Currently, Empty employs one person from the community and is in the process of hiring a second person.
“At the end of the day, you don’t have to ask people for things. You have your own independence,” she said in relation to operating her own business. She added that she is also part of an outreach programme in the community that assists needy persons.
Although family-owned businesses provide stability and continuity, they also come with inherent shortcomings such as strained family relationships and complex succession planning that can pose challenges to their success and longevity.
Making reference to a French study, Dr Stokes noted that “greater family ownership of a business can be the cause of below-optimal-levels of business growth based on internal financing, and a tendency to control the business leadership, either of which can constrain growth. Family-owned businesses also have a propensity to deliberately limit their growth”.
During Jamaica’s post-colonial era, the island attracted many Chinese, East Indians, Syrians, and Lebanese people. Over time, 21 notable non-black immigrant families were each able to establish thriving enterprises that have been playing pivotal roles in the economic development and social welfare of Jamaica and the wider region. Among these families are the Issas, the Matalons, the Bicknells, the Bovells, the Marzoucas, the Chens, and the Levys. They have made significant contributions to diverse sectors such as retail, manufacturing, and hospitality. Their commitment to innovation and sustainability of their businesses has also been significant.
“They did not arrive in Jamaica rich but were able to grow their wealth with a certain work ethic and cultural proclivity to business,” said Dr Stokes.
Explaining why there are not more black-owned family businesses in Jamaica, Dr Stokes pointed out that some have had “false starts”, notably during the financial sector crisis of the 1990s.
“A brief survey of the current business innovation and startup landscape shows a high level of involvement of young black men and women who make up in knowledge and drive what they may lack in family fortune and influence,” he related.
“It is a fact that black people in Jamaica have been subject to selfimposed and culturally imposed limitations that have poisoned our self-belief systems and our attitudes towards money, wealth, and success. The untruth of that has been laid bare, and more and more young black men and women are staking their claim to the capitalist class, understanding that in 2024, you have a chance to carve your own path regardless of what your forefathers were told their rightful place was,” Dr Stokes maintained.