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Instituto Valenciano de Investigaciones Económicas

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The most competitive Valencian family firms are more solvent and more profitable in the long run than the non-family firms

The GECE Observatory, sponsored by Bankia and the Ivie, launches the “Claves de Competitividad” collection of short reports

The Corporate Governance, Strategy and Competitiveness Observatory (GECE Observatory), created by Bankia and the Ivie, has launched the “Claves de competitividad” (Keys to Competitiveness) collection, a series of short reports presenting information relevant to Valencian firms. The first issue in the collection classifies Spanish companies in four levels of competitiveness: strong, sound, modest and weak. Each level contains 25% of the companies, classified according to the GECEcomp index, which is based on seven indicators: Profitability, short-term and long-term; Solvency, short-term and long-term; Cash-generating capacity, Asset productivity and Labor productivity.

Valencian firms account for 22.9% of the companies with strong competitiveness, falling slightly short of the 25% of Spanish firms as a whole. By ownership, 22.7% of family-owned Valencian firms have a strong level of competitiveness, compared to 31.1% of non-family Valencian firms.

However, the Valencian family firms classified as strongly competitive have better long-term profitability and solvency ratios than the non-family firms at the same level of competitiveness. Specifically, the average long-term profitability of the Valencian family firms is in the 81st percentile (i.e., among the top 20% of Spanish companies in terms of profitability), whereas that of the non-family firms is in the 71st percentile. In both long- and short-term solvency the family firms rank 7 percentiles above the non-family firms.

Issue no. 1 of the collection also shows that the percentage of medium-sized and large family and non-family businesses increases with the level of competitiveness. Whereas only 6.3% of medium-sized and large family firms are classified as weak in terms of overall competitiveness, a much larger proportion, close to 20%, are classified as strong. In the case of large- and medium-sized non-family firms, 23.5% are classified as weak and 52.8% as strong.

The proportion of companies that operate in more technology-intensive industries also increases with each step up the scale of competitiveness. Of the family companies considered weakly competitive, only 10.3% have high or medium-high technology intensity, as against 23.2% of those considered strongly competitive. Among non-family businesses, the percentage of technology-intensive firms increases from 13.1% in the weak group to 26.4% in the strong group.

23 November 2018