SMEs: Wives Providing Assistance in Their Husbands' Businesses are a Significant Resource

Research

Family members, primarily wives who help run their husbands' businesses, play an important role in the success of an enterprise. It is particularly small and medium-sized enterprises (SMEs) which benefit from the paid or unpaid work of these women.

This is the finding from a study carried out by the Centre for European Economic Research (ZEW) in Mannheim. As part of this study, ZEW surveyed around 1,200 women towards the end of 1999. These women were the wives or partners of entrepreneurs who assisted in their husbands' businesses, female owners or co-owners of businesses in the craft, industrial and trade sectors and women employed in liberal professions in Baden-Württemberg.

It is particularly common for women to participate in the running of their husband’s businesses when these businesses are relatively young and small. Two-thirds of women work in businesses with up to five employees, and around half of them work in companies that were founded fewer than ten years ago. It is particularly common for wives or female partners to undertake paid or unpaid work in businesses in the traditional craft industries. In contrast, co-ownership in this sector is rare. Accordingly, 80 per cent of the women surveyed in the craft sector assist their husbands in the running of their business, merely 20 per cent, however, describe themselves as owners or co-owners. These proportions are much more evenly balanced in the industry and trade sectors as well as in liberal professions.

On the whole, the survey indicates that women who are paid for assisting in their husband's or partner's business, or who are financially involved through the receipt of income, further training, and social security, are better off than female workers who are subject to the conditions of regular employment. There are, however, several issues when it comes to the social security of unpaid women. Unpaid employment is a particularly versatile resource. Women who help out in businesses without payment tend to work irregularly and, with an average of only 17 hours a week, relatively little in comparison to other groups of women. In addition, these women tend to have a very limited area of responsibility and it is rare that they have an employment contract. The majority of these women work in young and small firms where the provision of further training is below average. They often also have a second job. When compared to other employment groups, these women have the least amount of authority in decision-making processes. The fact that one quarter of unpaid women does not have a pension scheme suggests, however, that they bear part of the entrepreneurial risk. This also applies to the owners of start-ups, who are subject to a particularly high income risk and who frequently have no pension scheme. This suggests that the entrepreneurial risk is borne by both husband and wife.

The better established a firm the greater the chance that wives who carry out unpaid work will change their professional status. They might, for example, obtain the status of co-owner or register paid employment. Accordingly, these women are then able to invest in a better pension scheme. The study thus indicates that these women, as it were, "grow into" the business and that their socio-economic situation improves along with the increasing prosperity of the enterprise.