CLOSE your eyes and imagine a world where the most innovative companies aren’t big tech giants but family-run businesses. Now open your eyes, because you don’t have to imagine it: It’s reality.
To determine which countries have stronger property rights protections, we used the most comprehensive ranking available, the International Property Rights Index. Previous research has suggested that family businesses are more or less innovative based on two things: how large they are and whether they’re in a country that protects property rights. When property rights aren’t protected, people have less incentive to innovate—because their ideas are liable to be stolen.
This isn’t entirely surprising. Large companies often have more robust systems in place to protect against risks such as theft and fraud. And they have less need to innovate thanks to their size and established market presence. In contrast, smaller companies must innovate continuously to compete and grow.