Family-run businesses are vital to improving social equality and to Britain's economic success because of their commitment to giving back to communities and prosperity for all, according to new research. 

The University of Birmingham study led by Kiran Trehan is based on first-hand interviews and data on dozens of firms owned by family members. It shows they improve the life chances of marginalised groups, such as the homeless and ex-service personnel, by getting them back into jobs and providing retraining.

The researchers are calling on the government to cut business rates for family firms, offer them tax incentives and boost their access to infrastructure such as broadband in rural areas. They say this would boost investment in community development and sustainability.

The findings will be highlighted at an event as part of the annual Economic and Social Research Council’s (ESRC) Festival of Social Science.

Examples highlighted by the research include farming and dairy firm Yeo Valley which helps in children's education. Another is A.F Blakemore which is SPAR UK's largest division and encourages staff to mentor, regenerate rundown areas and get young people into work.

"Family-owned businesses employ millions of people and are a driving force throughout every region of the UK," says Kiran Trehan, professor of leadership and enterprise development at Birmingham Business School.

"They're an example of how passion and profit can work together to create sustainable businesses for the future. Those both big and small have a huge influence on the vitality, well-being, and sustainability of communities. The government needs to do more to support them."

There are more than three million family businesses in the UK including in disadvantaged and rural areas. They generate more than a quarter of gross domestic products (GDP), £133 billion in tax and employ more than 12 million people.

The University of Birmingham research looked at the impact of these firms on communities in three economically diverse areas — the West Midlands, North West and South East.

They reviewed company website data such as corporate social responsibility policies, interviewed owners and their staff, and shadowed them to collect their stories.

The Institute for Family Business Research Foundation-funded study found that family-run businesses tend to adopt an 'ethical' bottom line. They are not just focused on profit but on values such as fairness, equality and sustainability.

Professor Trehan says they 'pride themselves' on workplace practices based on trust consumers having trust in them and their product. "They also help narrow the productivity gap by supplying jobs and goods," she adds.

The project was commissioned by the Institute for Family Business Research Foundation.

The findings referenced in this release will be shared as part of an event entitled Family Businesses - Transforming Communities on 4 November for the public, policy makers and business leaders. The event is part of the ESRC’s flagship annual Festival of Social Science and will feature film, poetry and a photographic exhibition on the history and future of work in family businesses.