Family businesses don’t only stand in contradiction to the greedy, cold image of the business world, but the dry numbers also prove that the global economy depends, to a large extent, on the existence and success of family businesses. Evidence of the strength of family businesses can be seen in Dan Weiss's study (Family Businesses in Israel, 2012), which demonstrates how the shares of family companies between 2007 and 2010 showed an average yield of 35.1%, compared with 32.5% for non-family companies.
Financial institutions abroad already understand the uniqueness of family companies, and the index of family companies (CSFAM) was created for this purpose exactly. Since its inception, the index has yielded a 120% return, compared with 20% for the MSCI World Index.
Israel is a great place for family businesses to grow, and they definitely contribute much to the overall growth. Some family businesses even make it globally – here are two examples of groundbreaking Israeli companies that started their path and grew in family management:
In 1965, Yehudit and Yehuda Bronitzki established Ormat, a small factory in the industrial area of Yavne, in order to develop technologies for the production of electricity from alternative sources of energy. For years the factory was forced to exist from the production of shoe molds, but today Ormat is one of the world's leading manufacturers of environmentally friendly turbines.
The Bronitzkis keep it simple and family-owend all the way: the two executives have been eating lunch with Ormat workers and Ort-Ormat high school students for 40 years!
In 1952, after being fired from Rafael, Stef Wertheimer decided to set up a tool-making workshop for metal in his back yard in Nahariya. He marketed the products himself; mounted on his motorcycle he knocked on the doors of potential customers. The tools he produced were a big success, so he decided to establish a company. This was the birth of Iscar - a company that manufactures cutting tools for metals, which over the years has become a leader in its field and the second largest in the world.
Iscar grew so much and was eventually sold to Warren Buffett. The family doesn’t forget it all started with a small business in Nahariya. "My grandfather and [uncle] Eitan worked very hard to bring the company to where it is today”, said Stef Wertheimer's grandson, Eitan Harpaz.