Family constitution and firm resilience

Abstract

Purpose This study assumes that family constitution (FC) is beneficial to family firm resilience. We also argue that family social capital (FSC) can reduce the negative effect of not having FC in the short term, whereas FC is particularly effective when a firm has limited FSC.

Design/methodology/approach Empirical hierarchical regression analyses were conducted using a sample of family firms from the secondary (manufacturing) and tertiary (service) sectors, resulting in a final sample of 231 firms. We designed a questionnaire to collect key firm variables, such as whether the firm had FC, FSC level and resilience.

Findings Our analysis reveals that while FSC enhances resilience in family businesses, FC alone does not. This suggests a more complex relationship than initially thought, with FC playing a symbolic role. However, specific FC content, such as norms on family access to management positions, remuneration, succession planning, clear dividends and voting rights, influences resilience.

Originality/value The results of this study have theoretical and practical implications for family firms, suggesting ways to achieve higher resilience levels through FC implementation. Previous studies posit that resilience can be learned, built or transmitted. Accordingly, companies can adapt their governance mechanisms (e.g. those related to FC) to improve their capacity to prepare for change.