Economic determinants of the development and sustainability of family farms in Slovakia

Abstract

The sustainability of the family business mirrors the business success and functionality of the family. Sustainability cannot be ensured without sufficient business profitability, solvency and financial stability. A company unable to pay its obligations on time is insolvent and, therefore, unhealthy. The paper's main goal is to evaluate the impact of selected economic aspects on the sustainability of family farms in Slovakia. The Finstat database serves as the source of input data for the research. For the economic analysis of the family and non-family sets of companies, Grünwald's bonity index (GIB) was chosen for its universality. According to the Ministry of Economy of the Slovak Republic, family businesses can be considered less risky, especially considering the conservative way of management and the effort for long-term sustainability. However, the results of our research may differ. Family businesses show higher profitability of total and mainly equity capital but also low current liquidity and an undercapitalised state. The most increased non-credit current liquidity was achieved in family businesses in the pandemic years 2020 and 2021. The family businesses we monitored are more profitable than non-family businesses, they do not show an excessive increase in investments, and most of them seem to have a targeted and purposeful high level of short-term liabilities.

Keywords

• economic aspects
• family business
• grünwald index of bonity
• sustainability