November 2014

Germany Report

EDELMAN TRUST BAROMETERFamily Owned Enterprise Supplement

SUMMER SUPPLEMENT

WHO WE ARE INTERVIEWING

2

• 20 minute online questionnaire

• General population; Informed Publics*

• 12 countries (Brazil, China, France, Germany, India, Indonesia, Mexico, Russia, UK, US, Saudi Arabia & Spain)

• 1000 respondents per country

• Results will be analysed through two lenses: general population and Informed Publics (two sets of data)

*Natural fallout within each market

Indicates Global Data

Indicates Germany Data

SUMMER SUPPLEMENT

FAMILY-OWNED BUSINESSES ENJOY A TRUST ADVANTAGE OVER OTHER BUSINESS TYPES AMONG GERMAN GENERAL PUBLICSGENERAL PUBLICS TRUST LARGE AND SMALL FAMILY-OWNED BUSINESSES MORE THAN OTHER BUSINESS TYPES. INFORMED PUBLICS ARE MORE TRUSTING OF PRIVATELY-HELD FIRMS THAN FAMILY-OWNED BUSINESSES

79% 80%84%

60%65%

73%66%

60%

49%42%

SMALL FAMILY-OWNED LARGE FAMILY-OWNED PRIVATELY-HELD STATE-OWNED PUBLICLY-TRADED

Q5. Thinking about these different types of businesses, please indicate how much you trust each type of business to do what is right using a 9-point scale where one means that you “do not trust them at all” and nine means that you “trust them a great deal.” NET Trust (Top 4 Box)

7 in 10general publics trust family–

owned businesses

INFORMED PUBLICS

GENERAL PUBLICS

SUMMER SUPPLEMENT

ENTREPRENEURS/FOUNDERS ARE EXPECTED TO ENSURE OPERATIONAL TRANSPARENCYOVER 7 IN 10 GENERAL PUBLICS IN GERMANY SAY THAT ENTREPRENEURS/FOUNDERS ARE RESPONSIBLE FOR MAKING SURE THATTHEIR BUSINESS IS TRANSPARENT ABOUT THEIR OPERATIONS, A FIGURE WHICH RISES TO 81% AMONG INFORMED PUBLICS

84%

90%88% 88% 88%

85% 85%83% 83%

81%78%

76% 74%76%

88%

83% 83% 83%

76% 76%74% 73% 71%

73%

64%

72%

TOTAL Mexico India Indonesia China Spain Brazil US UK Germany Russia Saudi

Arabia

France

Q29: Please indicate how much you agree with each of the following statements – “Entrepreneurs/ founders are responsible to make sure that their business is transparent about their operations” NET Agree (Top 4 box) General Publics, 12-country global total, Informed Publics, 12-country global total

INFORMED PUBLICS

GENERAL PUBLICS

SUMMER SUPPLEMENT

FAMILY-OWNED BUSINESSES SHOULD FOCUS COMMUNICATIONS EFFORTS ON NEW PRODUCTS, EMPLOYMENT ISSUES, AND INNOVATION

MOST IMPORTANT COMMUNICATION TOPICS FOR FAMILY-OWNED BUSINESSES BY MARKET

New Products

Innovation

Employment

New Products

Innovation

Sustainability Policies

Employment

New Products

Innovation

New Products

Employment

Supply Chain

New Products

Innovation

CSR Policies

Employment

New Products

Finances

New Products

Employment

Innovation

Employment

New Products

Innovation

Employment

New Products

Sustainability Policies

New Products

Finances

Innovation

Sustainability Policies

New Products

Supply Chain

New Products

Innovation

Finances

Q10: Below is a list of areas a company can communicate about. In general, when forming an opinion of _____, how important are each of the following areas to be transparent about to build your trust in that company? NET Important (Top 4 Box) General Publics, 12-country global total

SUMMER SUPPLEMENT

ENTREPRENEURS/FOUNDERS TRUSTED TO MAKE THE RIGHT SUCCESSION DECISION; LESS EXPECTED TO PASS BUSINESS ON TO FAMILY MEMBER IN GERMANY THAN GLOBALLY

EXPECTATIONS OF ENTREPRENEURS

Q29. Please indicate how much you agree with each of the following statements. NET Agree (Top 4 Box) General Publics

71%

69%

61%

58%

44%

ENTREPRENEURS/ FOUNDERS ARE RESPONSIBLE TO MAKE

SURE THAT THEIR BUSINESS IS TRANSPARENT ABOUT THEIR

OPERATIONS

ENTREPRENEURS/ FOUNDERS HAVE A RESPONSIBILITY TO

MAKE A CONTRIBUTION TO SOCIETY

ENTREPRENEURS/ FOUNDERS OF SMALL- TO MEDIUM-

SIZED BUSINESSES ARE MORE INNOVATIVE THAN

ENTREPRENEURS OF BIG BUSINESSES

ENTREPRENEURS/ FOUNDERS WILL PICK THE RIGHT

PERSON TO SUCCEED THEM IN THEIR BUSINESS

ENTREPRENEURS/ FOUNDERS SHOULD PASS THEIR

BUSINESSES ON TO A SUCCESSOR FROM THEIR FAMILY

SUMMER SUPPLEMENT

TRANSITION CAN GROW TRUST IF DONE WELL; CAN HARM TRUST IF MISHANDLEDPOSITIVE AND NEGATIVE IMPACT ON TRUST OF FAMILY-OWNED BUSINESS BEING PASSED ON TO A FAMILY MEMBER

Q30. If the owner of a FAMILY-OWNED BUSINESS passed ownership or leadership of that business to a member of their family, how would that affect your trust in the business? NET Trust More (Top 2 Box), NET Trust Less (Bottom 2 Box) General Publics, 12-country global total

NB: Don’t know responses have been excluded

31%

46%

43%

38%

35%33% 33%

28%27%

25% 25%24%

16%17%18%

12%

17% 16% 17%

12%

15%

8%

41%

9%

16%

19%

Total India Brazil Indonesia Mexico Saudi

Arabia

Germany Spain US China UK France Russia

NET Trust More

NET Trust Less

SUMMER SUPPLEMENT

IMPORTANT FACTORS TO BUILDING TRUST WHILE PASSING ON OWNERSHIP OF FAMILY-OWNED BUSINESS

Q31. If the owner of a FAMILY-OWNED BUSINESS passed ownership or leadership of that business to a member of their family, how important would the following factors be to building your trust in the business? NET Important (Top 4 Box) General Publics, 12-country global total

NEXT GENERATION FAMILY MEMBER MUST BE APPOINTED ON MERIT, AND HAVE DEMONSTRATED THEIR COMMITMENT TO THE FUTURE OF THE BUSINESS

76%

76%

75%

74%

72%

62%

Evidence that the family member has

been appointed on merit

Evidence of the successor’s commitment

to the future of the business before

succession is completed

Clear, effective, and transparent

communications over the transition

period

Demonstrating the business experience

of the new family member within the

business

Showing relevant outside industry

experience of the new family member in

the business

A long transition period

SUMMER SUPPLEMENT

Q15. Now thinking about family-owned businesses in general, how much do you agree with each of the following statements? Please use a nine-point scale where one means “strongly disagree” and nine means “strongly agree”. NET Agree (Top 4 Box) General Publics9

FAMILY-OWNED BUSINESSES ARE EXPECTED TO BE PURPOSE DRIVENEXPECTATIONS OF FAMILY-OWNED BUSINESSES

76%

67%

67%

64%

64%

62%

62%

61%

58%

Family-owned businesses should be TRANSPARENT

ABOUT THEIR PHILANTHROPY

A family-owned business should KEEP THEIR

CHARITABLE SUPPORT SEPARATE FROM THEIR

BUSINESS INTERESTS

Family-owned businesses should FOCUS THEIR

CONTRIBUTIONS ON THE COMMUNITY WHERE THEY

ARE HEADQUARTERED

A family-owned business should INVEST IN

FOUNDATIONS ALIGNED WITH THEIR BUSINESS

INTERESTS

Family-owned businesses should PARTICIPATE IN

PHILANTHROPY THROUGH DONATING MONEY TO

SPECIFIC CHARITIES

Family-owned businesses should CONTRIBUTE TO

COMMUNITIES IN ALL MARKETS IN WHICH THEY

OPERATE

Family-owned businesses should BE ASSOCIATED WITH

CAUSE-RELATED MARKETING^

Family-owned businesses should FOCUS ON IMPACT

INVESTING*

Family-owned businesses should ACTIVELY

ENCOURAGE THEIR EMPLOYEES TO ENGAGE IN

PHILANTHROPY

*Impact investing is the placement of investments into businesses, organisations and funds designed to tackle social and environmental problems

alongside creating a financial return; ^Cause-related marketing is a collaboration between a corporation and a non-profit for mutual benefit

55%Expect family-owned

business to focus on

philanthropy more than non

family-owned businesses

SUMMER SUPPLEMENT

Environment

Education

Human Rights

Environment

Education

Social Causes

Social Causes

Education

Environment

Environment

Human Rights

Poverty

Poverty

Social Causes

Health

Social Causes

Environment

Human Rights

Social Causes

Environment

Poverty

Environment

Health

Education

Social Causes

Education

Environment

Education

Human Rights

Environment

Social Causes

Education

Health

Environment

Human Rights

Social Causes

NEARLY ALL MARKETS BELIEVE FAMILY-OWNED BUSINESSES HAVE A RESPONSIBILITY TOWARD THE ENVIRONMENT

RESPONSIBILITY OF FAMILY-OWNED BUSINESSES TOWARD CAUSES BY MARKET

Q18: How responsible do you feel _______, are towards the following causes? Please use a nine-point scale where one means that you find them “not at all responsible” and nine means that you find them “fully responsible”. NET Responsible (Top 4 Box) General Publics, 12-country global total

SUMMER SUPPLEMENT

BE PREPARED

11

Protect

Establish pre-emptive

systems to protect the

enterprise and family

members.

Project

Proactively and

transparently tell your

story.

Predict

Know what the

potential issues are

and manage the risk

accordingly.

SUMMER SUPPLEMENT

SUMMER SUPPLEMENT

On the cover, from top left: Jack Ma, founder of Alibaba: AFP; Robert Fisher, son of Gap, Inc. founder: THE CHRONICLE/Brant Ward; Thomas Rabe, CEO of Bartelsmann: GETTY IMAGES

EUROPE/Sean Gallup; Ratan Tata, founder of Tata Group; Cover of Thomas Piketty’s book Capital in the Twenty-first Centruy: HARVARD UNIVERSITY PRESS; Brazilian Oil and Gas Magnate

Eike Batista: REUTERS/Fred Prouser; Gautem Adani, chairman & founder of the Adani Group: THE HINDU BUSINESS LINE