The financial results of Greece’s bigger enterprises, mainly systemic banks and industries, which were released en masse at the end of last week, make for some very interesting reading. The companies in question are well-organized major groups, with profits running in the billions of euros, capital adequacy at historic highs, dividends distributed generously to satisfied shareholders, and returns reminiscent of a normal European economy. Their balance sheets appear robust, their management structures mature, and their outlook outward-looking.
If we were to go by the data alone, we would think we are looking at a thriving and rapidly growing economy. There is, however, an asterisk. The number of large, successful Greek companies is very small, and even fewer of them count or wield real influence on the international stage. They number no more than 20. After that, there is little but chaos.
It is often difficult to grasp the extent of the broader impact of these big companies and how heavily the Greek economy depends on their performance. One striking finding from data published by the Hellenic Statistical Authority (ELSTAT) and presented by Kathimerini last week is that just five companies account for 27.2% of Greece’s total export value. Nearly half of all exports (47.3%) are generated each year by only 50 companies. Most astonishing of all, 1,000 companies – out of the tens of thousands operating in Greece – account for 83.4% of the country’s exports. It is clearly a game dominated by a select and highly capable few.
The big players are pulling the cart, but the cart seems to have no back wheels – or, if it does, they are not strong enough to carry the load
The question is what kind of economy can be sustained with such a structure, with so few big companies able to compete internationally and thousands of extremely small and susceptible players.
In any normal productive economy, there is a peak occupied by a handful of strong groups; beneath them, you have a dense middle tier of firms that are in a position to carry the weight of growth; and lower down still, a firmament of small companies that are feeding the supply chain.
In Greece, however, we have a small number of large players at the very top but lack that crucial middle tier. Instead, entrepreneurship is overwhelmed by a vast layer of very small, often undercapitalized and heavily indebted businesses, many of them operating at the margins.
Large groups operate almost in parallel with the rest of the economy. They have corporate governance, strategic plans and international partnerships. They raise funds through markets rather than through personal connections or by tapping into the main shareholder’s pocket. They invest based on returns on capital, not on the survival of owners and their families. This makes them more resilient to shocks and sudden downturns in the economy. What is missing here, however, is an organized ecosystem of suppliers behind them – in the space where medium-sized companies typically stand. There is a lack of technology partners and mid-sized industries capable of creating scale. In most cases, there is no rising mid-level competitor ready to challenge or complement them. The big players are pulling the cart, but the cart seems to have no back wheels – or, if it does, they are not strong enough to carry the load.
Paradoxically, Greek society has learned to favor the many – no matter how small or limited their prospects – and to resent the powerful few. Yet size is not the enemy; it is an advantage. Mergers cannot be imposed, but they can be incentivized. If current incentives do not work, new ones must be found. Otherwise, with five companies generating a quarter of exports and 10 groups earning as much as all others combined, can we truly claim to have a solid and sustainable productive base in this country?