Think about this question: what do Michelin, Walmart, Sicly and Dolce & Gabbana have in common in these times of crisis? Like any other business, they thrive to survive, however, unlike non-family businesses, they have managed to develop resilience over time by dealing with different types of crisis, whether family or business crisis. As such, they have a unique asset of resilience which enables them to better navigate the crisis more efficiently, more smoothly, and proactively than other businesses.
Now let’s have a look at the different dimensions of resilience that family businesses are able to build. First of all, emotional resilience. As we all know, during crisis anxiety emerges, and sometimes paralyzes decision making. In family businesses there are historical narratives about how crisis were dealt with in previous times, with lessons learned that the current generation can build on to better manage their emotional dynamics. As such, family members are able to reduce the intensity of their negative emotions and instigate positive emotions, which are as contagious.
Second, social resilience. Family businesses have circles of loyalties which are multi-generational and mutual. These loyalties are done with different types of stake-holders, for example, the employees, the partners, the clients, the suppliers. As such, family businesses know that they can count on these stake-holders over generations to support them in times of crisis, to have the employees more committed and also, in return, support the employees and support the other partners whenever possible.
Third, financial resilience. Family businesses have references for self-financing and low rates of dividends distribution in order to pursue long-term investments. As such, they often have important liquidities and have privileged relationships with the bankers, making them reaching out to financial resources in a more accessible way. As such, they are able to fill financial gaps temporarily in these times of crisis.
Last but not least, the fourth resilience is entrepreneurial. Family businesses are more agile. They adapt their business models, they innovate their business models to be able to better serve their clients but also their communities. For example, some family businesses have transformed their production lines to produce masks, to produce hydro-alcoholic gels, and also they looked into their communities to provide them philanthropically with unique support through donations or other means.
So whether you are a family business member, family business advisor or a member of a family business in the future, learn that resiliency is very important, know how to identify it and build on it for a better future.
Rania Labaki is a Cornell Family Business Fellow and Professor of Family Business and Finance at the EDHEC Business School, as well as the Director of EDHEC Family Business Center. Recently, Rania was recognized with the 2020 Barbara Hollander Award from the Family Firm Institute, which exemplifies Barbara Hollander’s love of education and learning, life-long commitment to social causes, dedication to civic responsibility, belief in the human capacity to change for the better, and belief in giving to others generously.