The impact of COVID-19 has forced a drastic positive culture change in family firms, creating stronger solidarity and cohesion within companies, plus increased digitalisation, according to new research at the School.
Conducted by Professor Sascha Kraus, leading a team of authors from five other countries, the research study is based on 27 interviews with owners and managers of family firms in Austria, Germany, Italy, Liechtenstein and Switzerland. The firms varied in size and industry, and were all working through crisis management plans caused by the pandemic.
The researchers found that all of the firms’ CEOs and managers noted an increase in solidarity between employees. This was showcased through examples such as firms putting employees’ interests at the heart of all decisions, increased motivation, teamwork and team spirit, and increasingly the notion of everyone in the firm tackling the crisis together.
Over half of firms’ CEOs and managers also stated an increased digitalisation in their working practices. Many firms stated they already had capability and plans to further digitalise, however the impact of COVID-19 sped up this process and persuaded more reluctant employees to use digital tools.
Professor Sascha Kraus said:
“Within a very short period of time, the worldwide pandemic triggered by the coronavirus has caused severe limitations to daily private life as well as business life. The COVID-19 crisis represents a new type of challenge for companies, and family firms have had to drastically adapt to this, which has brought around a huge change in the culture of these typically traditional organisations.”
The researchers also reviewed these firms’ crisis management strategies in adapting to and tackling the impact of COVID-19 on their firms’ survival. They found that coping mechanisms used by firms differed due to industry and size – with a mix of strategies used, including simply surviving the crisis, persevering and looking to innovate, and cutting costs while looking to innovate.
Professor Kraus said:
“These adjustments have both short-term and long-term consequences and were usually made for two reasons. The first reason is safeguarding liquidity in the crisis. The second reason is to improve the long-term survival and viability of the company.”
This is the first empirical study on the effects of the COVID-19 crisis on family firms, and allows initial conclusions to be drawn about family firm crisis management. The research clearly shows the various techniques family firms have specifically employed to ensure they safeguard liquidity and ensure their survival, and how these changes have brought about a drastic positive change in company culture.
This research was published in the International Journal of Entrepreneurial Behavior & Research.