In the global economy, large corporations and billion-dollar startups typically dominate the headlines. It is family-run businesses, however, that form the backbone of entrepreneurship, particularly in emerging markets such as India. These small, family-run businesses play a vital role in job creation and strengthening local economies and social fabric.

A key challenge for many countries is finding cost-effective ways to support family-run businesses, especially when resources are limited. Many of these businesses are low-income households driven by necessity — their businesses provide the income that is often the lifeline for their livelihood. As such, it is essential for countries to invest in the long-term development of small businesses to strengthen economic resilience at the household and local levels.

In our recent study, “Effects of Household Characteristics on Low-Income Family Businesses: Evidence from India,” my co-authors and I explore how various household-level factors, such as education, gender, and enterprise type, impact the returns of low-income family businesses compared to high-income family businesses.

Whereas many studies on entrepreneurship have focused on the individual, our study adopts a household perspective. This reflects the role of family members who actively help manage the business, even though their contributions are not captured on formal balance sheets.

Using a nationally representative household data panel from India, a country which has the largest number of such family businesses, our research findings underscore the important interplay of family and education in shaping entrepreneurial success and failure.

Education, particularly at the household level, has a positive impact on business income and reduces the likelihood of business failure, with stronger effects observed for lower-income entrepreneurs. Our research shows that greater family member participation and higher average educational attainment, regardless of age or formal business involvement, are associated with improved income and reduced risk of business failure. This positive impact is in addition to the impact of the education level of the individual business owner.