FAMILY FIRMS: COVID-19 CHALLENGES AND FUTURE OUTLOOK
Keywords:
Family Firms, Resilience, ESG Agenda, Technological Transformation, COVID-19.
Abstract
The COVID-19 pandemic endangered the survival of many firms and emphasized the need to reevaluate corporate strategy. This paper studies the impact of the pandemic on family businesses and how it changed their strategy, priorities, and outlook. We use data from the PricewaterhouseCoopers (PwC) Family Business Survey 2021 that covers 2,801 family firms in 87 countries. Our study highlights some of the challenges family businesses faced during the pandemic and the need for an updated blueprint to ensure their long-lasting success. The survey draws attention to the financial resilience of family businesses and their unique advantages in terms of reputation and trust. However, it also underscores the need for family firms to adopt a more focused environment, social and governance (ESG) agenda, and to invest in technological transformation. The paper analyzes the congruity between academic research and CEO responses and forms a bridge between the academic literature on family firms and the real-world surveys of CEOs of family businesses conducted by PwC.
JEL Classification Codes: G32, M10, M53, L20, L21.
References
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Albuquerque, R., Koskinen, Y., & Zhang, C. (2019). Corporate social responsibility and firm risk: Theory and empirical evidence. Management Science, 65(10), 4451-4469.
Amann, B., & Jaussaud, J. (2012). Family and non-family business resilience in an economic downturn. Asia Pacific Business Review, 18(2), 203-223.
Block, J. H. (2012). R&D investments in family and founder firms: An agency perspective. Journal of Business Venturing, 27(2), 248-265.
Canavati, S. (2018). Corporate social performance in family firms: a meta-analysis. Journal of Family Business Management, 8(3), 235-273.
Casson, M. (1999). The economics of the family firm. Scandinavian Economic History Review, 47, 10–23.
Chrisman, J. J., & Patel, P. C. (2012). Variations in R&D investments of family and non-family firms: Behavioral agency and myopic loss aversion perspectives. Academy of management Journal, 55(4), 976-997.
Craig, J. B., & Moores, K. (2015). The A-GES framework: Understanding the family business difference. In S. L. Newbert (Ed.), Small business in a global economy: Creating and managing successful organizations (pp. 123–154). Santa Barbara: Praeger.
Bain, D. (2020) The World’s Top 750 Family Businesses Ranking. Family Capital. Retrieved from https://www.famcap.com/the-worlds-750-biggest-family-businesses.
De Massis, A., Frattini, F., Majocchi, A., & Piscitello, L. (2018). Family firms in the global economy: Toward a deeper understanding of internationalization determinants, processes, and outcomes. Global Strategy Journal, 8(1), 3-21.
De Massis, A., Frattini, F., Kotlar, J., Petruzzelli, A. M., & Wright, M. (2016). Innovation through tradition: Lessons from innovative family businesses and directions for future research. Academy of Management Perspectives, 30(1), 93-116.
De Massis, A., & Rondi, E. (2020). COVID-19 and the future of family business research. Journal of Management Studies, 57(8), 1727-1731.
Ding, W., Levine, R., Lin, C., & Xie, W. (2021). Corporate immunity to the COVID-19 pandemic. Journal of Financial Economics, 141(2), 802-830.
Duran, P., Kammerlander, N., Van Essen, M., & Zellweger, T. (2016). Doing more with less: Innovation input and output in family firms. Academy of Management Journal, 59(4), 1224-1264.
Edelman Trust Barometer (2021). Retrieved from https://www.edelman.com/trust/2021-trust-barometer.
El Ghoul, S., Guedhami, O., Wang, H., & Kwok, C. C. (2016). Family control and corporate social responsibility. Journal of Banking & Finance, 73, 131-146.
Erdogan, I., Rondi, E., & De Massis, A. (2020). Managing the tradition and innovation paradox in family firms: A family imprinting perspective. Entrepreneurship Theory and Practice, 44(1), 20-54.
Gómez-Mejía, L. R., Haynes, K. T., Núñez-Nickel, M., Jacobson, K. J., & Moyano-Fuentes, J. (2007). Socioemotional wealth and business risks in family-controlled firms: Evidence from Spanish olive oil mills. Administrative Science Quarterly, 52(1), 106-137.
Hiebl, M. R. (2015). Agency and stewardship attitudes of chief financial officers in private companies. Qualitative Research in Financial Markets, 7(1), 4-23.
Hu, Q., & Hughes, M. (2020). Radical innovation in family firms: a systematic analysis and research agenda. International Journal of Entrepreneurial Behaviour and Research, 26(6), 1199-1234.
Lins, K. V., Servaes, H., & Tamayo, A. (2017). Social capital, trust, and firm performance: The value of corporate social responsibility during the financial crisis. The Journal of Finance, 72(4), 1785-1824.
McConaughy, D. L., Matthews, C. H., & Fialko, A. S. (2001). Founding family controlled firms: Performance, risk, and value. Journal of Small Business Management, 39(1), 31-49.
Muñoz-Bullón, F., Sanchez-Bueno, M. J., & De Massis, A. (2020). Combining internal and external R&D: The effects on innovation performance in family and non-family firms. Entrepreneurship Theory and Practice, 44(5), 996-1031.
PwC, Global Family Business Survey (2018). The values effect, 2018. Retrieved from https://www.pwc.com/gx/en/services/family-business/family-business-survey-2018.html.
PwC, Five urgent global issues and implications (2020). Retrieved from https://www.pwc.com/gx/en/issues/assets/pdf/pwc-adapt-five-urgent-global-issues-and-implications-may.pdf
PwC, Global Family Business Survey (2021). From trust to impact, 2021. Retrieved from https://www.pwc.com/gx/en/services/family-business/family-business-survey-2018.html.
Rolandi, A. (2019). Investors Increasingly Turning To ESG, Report Finds. Funds europe.com. Retrieved from https://www.funds-europe.com/news/investorsincreasingly-turning-to-esg-report-finds.
Rondi, E., Überbacher, R., von Schlenk-Barnsdorf, L., De Massis, A., & Hülsbeck, M. (2021). One for all, all for one: A mutual gains perspective on HRM and innovation management practices in family firms. Journal of Family Business Strategy, 100394.
Steier, L. (2005). Executive succession in entrepreneurial business. The Blackwell Encyclopedic Dictionary of Entrepreneurship, 2, 125-128.
Zhou, H., He, F., & Wang, Y. (2017). Did family firms perform better during the financial crisis? New insights from the S&P 500 firms. Global Finance Journal, 33, 88-103.
Albuquerque, R., Koskinen, Y., & Zhang, C. (2019). Corporate social responsibility and firm risk: Theory and empirical evidence. Management Science, 65(10), 4451-4469.
Amann, B., & Jaussaud, J. (2012). Family and non-family business resilience in an economic downturn. Asia Pacific Business Review, 18(2), 203-223.
Block, J. H. (2012). R&D investments in family and founder firms: An agency perspective. Journal of Business Venturing, 27(2), 248-265.
Canavati, S. (2018). Corporate social performance in family firms: a meta-analysis. Journal of Family Business Management, 8(3), 235-273.
Casson, M. (1999). The economics of the family firm. Scandinavian Economic History Review, 47, 10–23.
Chrisman, J. J., & Patel, P. C. (2012). Variations in R&D investments of family and non-family firms: Behavioral agency and myopic loss aversion perspectives. Academy of management Journal, 55(4), 976-997.
Craig, J. B., & Moores, K. (2015). The A-GES framework: Understanding the family business difference. In S. L. Newbert (Ed.), Small business in a global economy: Creating and managing successful organizations (pp. 123–154). Santa Barbara: Praeger.
Bain, D. (2020) The World’s Top 750 Family Businesses Ranking. Family Capital. Retrieved from https://www.famcap.com/the-worlds-750-biggest-family-businesses.
De Massis, A., Frattini, F., Majocchi, A., & Piscitello, L. (2018). Family firms in the global economy: Toward a deeper understanding of internationalization determinants, processes, and outcomes. Global Strategy Journal, 8(1), 3-21.
De Massis, A., Frattini, F., Kotlar, J., Petruzzelli, A. M., & Wright, M. (2016). Innovation through tradition: Lessons from innovative family businesses and directions for future research. Academy of Management Perspectives, 30(1), 93-116.
De Massis, A., & Rondi, E. (2020). COVID-19 and the future of family business research. Journal of Management Studies, 57(8), 1727-1731.
Ding, W., Levine, R., Lin, C., & Xie, W. (2021). Corporate immunity to the COVID-19 pandemic. Journal of Financial Economics, 141(2), 802-830.
Duran, P., Kammerlander, N., Van Essen, M., & Zellweger, T. (2016). Doing more with less: Innovation input and output in family firms. Academy of Management Journal, 59(4), 1224-1264.
Edelman Trust Barometer (2021). Retrieved from https://www.edelman.com/trust/2021-trust-barometer.
El Ghoul, S., Guedhami, O., Wang, H., & Kwok, C. C. (2016). Family control and corporate social responsibility. Journal of Banking & Finance, 73, 131-146.
Erdogan, I., Rondi, E., & De Massis, A. (2020). Managing the tradition and innovation paradox in family firms: A family imprinting perspective. Entrepreneurship Theory and Practice, 44(1), 20-54.
Gómez-Mejía, L. R., Haynes, K. T., Núñez-Nickel, M., Jacobson, K. J., & Moyano-Fuentes, J. (2007). Socioemotional wealth and business risks in family-controlled firms: Evidence from Spanish olive oil mills. Administrative Science Quarterly, 52(1), 106-137.
Hiebl, M. R. (2015). Agency and stewardship attitudes of chief financial officers in private companies. Qualitative Research in Financial Markets, 7(1), 4-23.
Hu, Q., & Hughes, M. (2020). Radical innovation in family firms: a systematic analysis and research agenda. International Journal of Entrepreneurial Behaviour and Research, 26(6), 1199-1234.
Lins, K. V., Servaes, H., & Tamayo, A. (2017). Social capital, trust, and firm performance: The value of corporate social responsibility during the financial crisis. The Journal of Finance, 72(4), 1785-1824.
McConaughy, D. L., Matthews, C. H., & Fialko, A. S. (2001). Founding family controlled firms: Performance, risk, and value. Journal of Small Business Management, 39(1), 31-49.
Muñoz-Bullón, F., Sanchez-Bueno, M. J., & De Massis, A. (2020). Combining internal and external R&D: The effects on innovation performance in family and non-family firms. Entrepreneurship Theory and Practice, 44(5), 996-1031.
PwC, Global Family Business Survey (2018). The values effect, 2018. Retrieved from https://www.pwc.com/gx/en/services/family-business/family-business-survey-2018.html.
PwC, Five urgent global issues and implications (2020). Retrieved from https://www.pwc.com/gx/en/issues/assets/pdf/pwc-adapt-five-urgent-global-issues-and-implications-may.pdf
PwC, Global Family Business Survey (2021). From trust to impact, 2021. Retrieved from https://www.pwc.com/gx/en/services/family-business/family-business-survey-2018.html.
Rolandi, A. (2019). Investors Increasingly Turning To ESG, Report Finds. Funds europe.com. Retrieved from https://www.funds-europe.com/news/investorsincreasingly-turning-to-esg-report-finds.
Rondi, E., Überbacher, R., von Schlenk-Barnsdorf, L., De Massis, A., & Hülsbeck, M. (2021). One for all, all for one: A mutual gains perspective on HRM and innovation management practices in family firms. Journal of Family Business Strategy, 100394.
Steier, L. (2005). Executive succession in entrepreneurial business. The Blackwell Encyclopedic Dictionary of Entrepreneurship, 2, 125-128.
Zhou, H., He, F., & Wang, Y. (2017). Did family firms perform better during the financial crisis? New insights from the S&P 500 firms. Global Finance Journal, 33, 88-103.
Published
2021-12-05
How to Cite
Banerjee, A. (2021). FAMILY FIRMS: COVID-19 CHALLENGES AND FUTURE OUTLOOK. International Journal of Accounting & Finance Review, 9(1), 39-45. https://doi.org/10.46281/ijafr.v9i1.1477
Section
Research Paper/Theoretical Paper/Review Paper/Short Communication Paper
Copyright (c) 2021 Anandi Banerjee
This work is licensed under a Creative Commons Attribution 4.0 International License.
