Opinion: family businesses have many characteristics which make them more resilient than other types of firms in a crisis like this
The impact of Covid-19 on the Irish economy makes for grim reading, between the spike in unemployment and business closures. As the economy begins to re-open and restrictions are lifted, a clearer picture will emerge as to which businesses are weathering the current crisis. While every crisis is unprecedented, research suggests that certain organisations, by their nature, have a greater ability to overcome critical events and bounce back from adversity.
Family businesses, which are the backbone of the Irish economy, and part of our social, historical and economic fabric, are one such type of organisation. According to the most recent report, family businesses account for 64% of all businesses in Ireland and come in all shapes and sizes and sectors from farming to hospitality. Many of these businesses are multigenerational, some surviving six generations and beyond.
While we are accustomed to reading stories of their demise due to emotional and nepotistic tendencies, the good news for family businesses is that certain aspects of family ownership may also contribute to their survival and influence how they respond to and recover from Covid-19. Often an unheard voice alongside louder multinationals, family businesses may prove to be the champions in our economic recovery during and after Covid-19 due to their ability to cope with critical events.
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From RTÉ Radio 1's Weekend show, what's it like to run a business with your family?
The term organisational resiliency has been used to describe the inherent characteristics of organisations that are able to respond more quickly, recover faster or develop more unusual ways of doing business under duress than others. Another view of organisational resilience is the ability of organisations to learn and develop capacities to innovate during a changing environment.
What potentially makes family businesses more organisationally resilient than other types of firms? Research into organisational resilience and family businesses has shown that family businesses, over time, accumulate stocks of individual and family resources which support family businesses during times of crises.
Such resources include idiosyncratic, deep-firm specific tacit knowledge which has been transferred from generation to generation, their established networks including customer base and supply chain, their strong reputation based on the family name and individual and collective creativity. The "know how" embedded in family businesses, and the "know who" in terms of customers, suppliers, history and innovation, are key strengths which can be drawn on particularly in times of crises and turbulence. Family businesses are also considered to be flexible in nature allowing them to make decisions more quickly, without the bureaucracy other types of businesses have to deal with.
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From RTÉ Radio 1's Weekend show, an interview with Kilkenny Design Group's Marian O'Gorman about the tough side of family businesses
As a result of Covid-19's unprecedented and unforeseen disruption to everyday life, many family businesses have had to adapt or demonstrate their ability and capacity to adapt resources for survival due to government restrictions put in place. These restrictions may limit or change how family businesses operate, interact with stakeholders and, in essence, survive.
Some businesses adapted quickly and innovatively, moving their operations online and redefining how they do business. We saw family-owned restaurants operating takeaway menus and family-owned retail stores offering online sales and delivery. In fact, some of these businesses were able to operate relying on family members alone, thus reducing the risk of the spread of the virus to non-family employees.
During a time of crisis, the family itself is a key resource in family businesses. Family businesses can turn to family members, both those directly and indirectly involved in the business, to help out, which is a resource unique to family businesses. Helping is a natural occurrence in family businesses and the family in the business provides an additional pool of resources to tap into.
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From RTÉ Radio 1's Like Family, Brenda Donohue meets families with a family business and asks what the future holds.
Non-economic motivations have also been put forward as reasons why family businesses can weather storms. These include their identity, emotional attachment to their businesses, commitment and sense of obligation to the continuity of the business, non-family employees and local communities. While family businesses can turn to family members for help and support, the role of non-family employees is vital to family businesses survival.
If you take a walk through the English Market in Cork, you are faced with spectacular choice, not to mention aromas, from family food producers, some in existence since 1898. As he navigates the crises, Tim Mulcahy, a third generation family trader with The Chicken Inn in the market, commented that "the reintroduction of staff members was like a family reunion, but the family is not complete yet still a bit to go". Mulcahy added he was proud to report this positive action to his cocooning parents, who spent their lives building the business.
This hub of family businesses has survived multiple crises, including recessions, war and fires, demonstrating their ability to survive, recover from and thrive after extreme events. These long-standing businesses represent hundreds of years of learning how to deal with the aftermath of disasters and a climate of turbulence. Their family status has contributed to their resilience and ultimate survival.
The author is currently researching how family businesses in Ireland are responding to the crisis. If you would like to be part of the research, contact her at linda.murpy@ucc.ie
The views expressed here are those of the author and do not represent or reflect the views of RTÉ
