Organizational and Strategic Challenges of (family) SMEs in Limburg
People in photo from left to right: Anita Van Gils, Joost van den Akker, Jolien Huybrechts, Roy Broersma
In collaboration with the Province of Limburg, Jolien Huybrechts, Anita Van Gils, Roy Broersma and Yannick Bammens, researchers at SBE’s department of Organization, Strategy & Entrepreneurship mapped out the organizational and strategic challenges of (family) SMEs in Limburg. Based on a large-scale survey executed in May-June 2019, responses were collected from 759 enterprises (18.8% response rate). In this research project, special attention was directed at family firms as they make up 70 to 75% of all SMEs in the Province of Limburg, but also in other parts of the Netherlands, and are considered to be the backbone of our economy.
Challenges for SMEs
One of the most prominent challenges identified in the report concerns the succession and the preparation for succession. 36.5% of the respondents intend to transfer or stop the business within 5 years, mainly due to the retirement age of the current owner-managers In about 1⁄3 of these cases, the desired transfer strategy is selling the company. Looking solely at the family businesses in the sample, about 40 percent of the family owners prefer to transfer the company within the family and another 33 percent opt to sell the company. The low percentage that aims at family succession, and the considerable group of companies that are in danger of being sold, may partly be due to children’s reluctance to join the company. For the employment in our province, this finding is unfortunate as previous research shows that family owners can be particularly good employers, are less inclined to lay off staff in difficult times, and due to their strong regional anchoring, are not likely to relocate their company to other regions or countries either. Regarding the organizational and financial planning of the succession, especially the firms that desire to transfer the company within 1 to 5 years are not well prepared. For instance, the percentage of owners that knows the value of their company is limited.
Governance - An untapped opportunity?
Furthermore, results show that the attention of SMEs for corporate or family governance structures is rather limited. Less than 10 percent of SMEs have a supervisory or an advisory board, while the advantages of both entities are clear from previous research in the context of SMEs. In comparison to a similar study we executed amongst this population in 2015, little to no progress has been made in further professionalizing these advisory and control functions in SMEs.
In terms of innovation, the family businesses in our sample perform less than their non-family counterparts. For example, they invest less in R&D and set up less innovation-related partnerships with external parties. As a result, their innovation output is also lower than that of non-family SMEs. Although these results are similar to these of other studies, we need to acknowledge that we did not measure innovation input or output over time, while the long term-continuity and the patient capital of family firms allows them to spread their investments over a longer time period.
Lastly, it is interesting to note that the majority of SMEs in Limburg invest in corporate social responsibility and that these investments mainly take place within the region. Family businesses invest significantly more in CSR compared to the nonfamily businesses.
Innovation is the silver bullet in determining a firm’s continued success. It therefore is good as a small or medium sized entreprise to regularly check your business model to see if you are not missing any opportunities. Collaborate with students of Maastricht University to do this check during this one-day program. Next to this we offer a variety of workshops aimed at increasing your innovative capabilities.
The full report can be downloaded here (only available in Dutch).