In 1891, in the back room of his pharmacy, Dr. August Oetker contrived the baking powder “Backin.” At that time, there was certainly no way for him to comprehend the impact that this would have: with his invention, he was to lay the foundation for the more than 100-year success story of the Bielefeld company Dr. August Oetker, which – as a fourth-generation business – continues this tradition today as one of the most successful family-owned businesses in the world.

The Oetker corporation is merely one of the more than half a million medium-sized businesses in North Rhine-Westphalia that have remained in family hands to present day. One-third of the nation's 100 largest family-owned companies are located in North Rhine-Westphalia, including the clothing company Peek & Cloppenburg, the retail group Metro and the household appliance producer Miele. “Inventiveness and an innovative spirit, flexibility and agility – those are the special characteristics that family-owned businesses possess,” praises Christa Thoben, North Rhine-Westphalia's Minister for Economic Affairs. “They are the vital heart of our economy.”

Family dynasties on the road to success

Vorwerk, another of the companies with a long tradition in North Rhine-Westphalia, has captured the hearts of housewives – and husbands – since 1883. Founded 125 years ago in Wuppertal, the former carpet factory has now become a globally active corporate group. Vorwerk has successfully focused on the area of direct sales since the 1930s, and now counts as one of the international market leaders in its field. In addition to cosmetic products, the family-owned business primarily sells household appliances such as vacuum cleaners. With the akf bank group, HECTAS building services and the Vorwerk carpet works, the group has continually opened itself to new markets.

A further example: the Henkel family, who has made economic history with brand names such as “Persil,” “Pattex” and “Pril.” This global player, which was originally founded in 1876 with only 3 employees, is structured in three corporate sectors that now operate internationally: detergents and cleaning supplies, cosmetics and hygiene articles, adhesives and sealing compounds. As such, Henkel has mastered a synthesis of international corporation and family-owned business in a particularly intelligent way: The company has been listed on the stock exchange since 1996, yet the Henkels still hold a majority share of 51 percent, ensuring that the family will continue to play a large part in future decision-making – just as the company's founder Fritz Henkel would have wanted.

Secret heroes

More than a few of the family-owned businesses between the Rhine and the Weser are “hidden gems”: widely unknown to the public and yet worldwide market leaders in their respective segments. Such is the case with the organ building company Klais in Bonn. This company, a fourth-generation family-owned business, is the Number One organ builder worldwide. Founder Johannes Klais began setting new standards in his craft as early as 1882. Today, his great-grandson Philipp Klais continues to carry on the family tradition and add new innovative impulses – with passion and the courage to find creative solutions.

Scientific studies have unequivocally shown that family-run businesses are extraordinarily successful. According to a study conducted by the German Institute for Economic Research (DIW), family-owned businesses generate higher revenue than large corporations on average. About 21 percent of all family-run businesses achieved a net profit margin of more than ten percent between the years of 2003 and 2006.

Pillars of the economy
 
What's more: small and medium-sized family-owned businesses are masters in providing jobs and are therefore the backbone of the labor market. Such companies not only generate some 42 percent of the German economy's total revenue, they also provide about 57 percent of all jobs. Yet perhaps the most important reason for their competitive edge is the special nature of their corporate culture, supported by a pronounced sense of responsibility towards their employees and the people in the region.

Correspondingly, the Witten Institute for Family-Owned Businesses (WIFU) discovered that privately owned companies often think more long-term and therefore survive longer. For such companies, high standards of quality and corporate responsibility always go hand in hand. The WIFU experts concluded: In times of internationalization and globalization, being successful in the world market and retaining values as well as a certain rootedness are not necessarily contradictions.