The landscape of Polish entrepreneurship has been significantly shaped by businesses founded during the pivotal year of 1989, a time marked by the country’s economic transition. Fundacja Firmy Rodzinne (FFR) in collaboration with EY, developed a report, having used data delivered by Dun & Bradstreet, covering 13,776 businesses established in 1989, which accounts for 53% survival rate over 35 years, a significant achievement by the founders and their associates. This articles presents highlights and summarizes this profound report on this important group of Polish enterprises.  

Eurostat data shows the 5-year enterprise survival rate in the EU-27 is 45%, and just below 40% in Poland. Therefore, the fact that 53% of businesses founderd in 1989 are still operational today is a testament to their founders’ and managers’ perseverance, especially amidst the tumultuous global economic landscape of the past five years.

The last five years have been fraught with high volatility, presenting extraordinary challenges over a 35-year horizon. Events such as the COVID-19 pandemic and the war in Ukraine have ushered in significant economic and ideological shifts, profoundly impacting the operations of many enterprises, including Poland’s oldest businesses. Report entitled “Polish pioneers of entrepreneurship” builds upon the findings of a similar report prepared by FFR five years ago. Its goal remains the same: to analyze and present the current state of enterprises that play a crucial role in binding the economy together and influencing its condition and shape.

Resilience

One of the main observations is that, over the past five years, 1,595 companies founded in 1989 have ceased operations. Nevertheless, the majority remain active, demonstrating remarkable resilience despite the aforementioned macroeconomic upheavals. Interestingly, fewer businesses closed in the last five years compared to the period between 2008-2011, during the global financial crisis, when over 2,800 Polish companies from the initial wave of free-market entrepreneurship shut down.

– The COVID-19 pandemic was an undoubted test of survival, which showed significant differences in the resilience of companies. The crisis has taught us how important it is for an organization to be orderly, have reserves, coherent leadership and the ability to respond flexibly to changes. It turns out that resilience can be learned and systematically built – says Eleni Tzoka-Stecka, project coordinator at FFR. – The European Commission has financed many initiatives to increase the resilience of companies, and their beneficiaries are also Polish entrepreneurs. Particularly noteworthy are the Resc-EWE tools, which in 2023 were awarded an “European Commission Oscar” for the best project in the „Development of entrepreneurs’ competences” category. The Family Business Foundation was one of the project partners, thanks to which the Polish version of the tools was created, which we share free of charge with entrepreneurs – continuous Tzoka-Stecka.

Racing Against Inflation: Two-Speed Development

Analyzing financial data for the largest 147 companies from the dataset, it was estimated that their activity grew by over 39% from 2019 to 2022. This growth outpaced the inflation rate for the same period by nearly 10%. This calculation is particularly significant for the largest companies, indicating that these businesses have managed to sustain and even grow despite economic pressures.

– Comparing the overall inflation rate with the performance of individual company size categories provides more insightful conclusions. Although large and medium-sized enterprises coped with inflation relatively well, micro-enterprises outperformed it by only 3 percentage points, and small enterprises lost the race against inflation by almost 8 percentage points – says Konrad Bugiera, PhD, author of the analytical part of the report.

These differences may explain the observed phenomenon that we previously reported in the context of employment in companies of different sizes. To clarify, we are probably dealing with a flow of employment from smaller companies to the largest ones. This explanation can be additionally confirmed by an analysis of the dynamics of revenues in relation to the growth rate of the minimum wage in Poland.

Gender Equality in Leadership

Women lead only 15% (2,017) of the researched enterprises. A significant portion of these (1,800) are sole proprietorships, indicating that many of these businesses were founded by women. This statistic underscores the need for continued efforts towards gender equality in business leadership.

– The number of women in management boards of companies with a longer history, in my opinion, reflects social phenomena related to status, unnatural division of roles and stereotypes that did not take into account talents, predispositions, or even education – reflects Magda Kwiatkiweicz, Chairwoman of the Supervisory Board of YES Biżuteria S.A. – Women were supposed to stay in the shadows, possibly focusing on image-related rather than strategic functions. Their professional competences and skills were not taken into account, because the generally acceptable scope of duties was almost exclusively domestic – she sadly points out. 

Geographical Distribution of 35-Year-Old Businesses

Wielkopolskie Voivodeship remains home to the largest number of these pioneer enterprises, with Krakow leading among cities. The 35th anniversary of Poland’s free economy highlights the top 35 locations with the highest concentration of 35-year-old businesses, notably including smaller urban centers with populations under 100,000.

Medium-Sized Enterprises: Productivity Champions

Revenue data from 2021, considered more representative than 2022 due to the Ukraine conflict, indicates that medium-sized enterprises generate much higher revenues per employee compared to other categories. This highlights their efficiency and significant contribution to the economy.

– The effectiveness of SMEs is higher thanks to employees who identify with the organization, often have matured with it both professionally and personally, and treat it as „their own”, hence their greater commitment, motivation, better quality of work and responsibility for common success. Moreover, higher profitability in SMEs compared to large companies may be influenced by greater flexibility, and thus faster response to market changes or a more efficient decision-making process – comments Maciej Skrzypczak, CFO at GELG Ltd.

Prevalence of Sole Proprietorships

A staggering 85% of the businesses analyzed are sole proprietorships. Among these, 1,058 are small and medium-sized enterprises, and five are large enterprises employing a combined total of 1,977 people. None of these large sole proprietorships have assigned succession proxies, raising concerns about their sustainability in the face of unforeseen circumstances such as the illness or death of the owner.

Sectoral Distribution of 35-Year-Old Businesses

The analysis includes a detailed breakdown of the most numerous sectors (Polish business-sector classification) where these businesses operate, accounting for more than half of the enterprises in the study. This sectoral distribution provides insights into the economic areas that have sustained these businesses over the past 35 years.

Conclusion

The resilience of Poland’s 35-year-old businesses is a testament to their ability to navigate and adapt to economic challenges. Their continued operation amidst recent global disruptions underscores the importance of strategic adaptation and support from both national and European institutions. As Poland celebrates 35 years of a free economy, these businesses stand as pioneers and pillars of entrepreneurship, shaping the country’s economic landscape.

If you’re interested in more details and in-depth analysis, please read the report summary at: 

Polish pioneers of entrepreneurship 35-year-old businesses in Poland.