Works councils in family businesses in Germany: Why are there so few?

Works councils are an inherent part of the German economic and social system. An analysis of the prevalence of works councils in Germany reveals that they are not uniformly distributed across all types of businesses. Works councils occur less frequently in owner-managed businesses - regardless of their size - than in companies run by employed managers. The reasons for this low prevalence are still largely unknown as there has been practically no discussion of this phenomenon in the literature so far. This paper delivers first answers to this question by conducting an exploratory study. Based on a literature analysis and an empirical analysis of a secondary dataset, we found some explanations why works councils are so rarely established in family businesses. These explanations refer to special characteristics of the owner-manager (i. e. eagerness for independence) as well as to special characteristics of family businesses as a whole (i. e. performance and organizational changes).