Family businesses showed resilience during COVID-19 pandemic
Family businesses were found to be 42 per cent more likely to implement business transformation strategies during COVID-19 pandemic
Hyderabad: The unique structure of family businesses empowered them to respond to the impact of COVID-19, according to a new study made by STEP Project Global Consortium and KPMG Private Enterprise.
Titled 'Mastering a comeback: How family businesses are triumphing over Covid-19', the report includes visions from nearly 2,500 family businesses and more than 500 non-family businesses, across 75 nations. Thomas Schmidheiny Centre for Family Enterprise, Indian School of Business (ISB), was the only member from India conducted the survey in India.
The involvement of the family and their long-term mindset has enabled them to demonstrate resilience in the face of the pandemic, which has placed them in a key role to lead the economic recovery, says the report.
"Lower percent of companies in India (29 per cent) took actions to reduce/eliminate labour costs when compared to the global average of 36 percent. Emphasis on cost reduction through cutting operating costs, cut down on investments, restructuring, deferring payments and expenses, and reducing the top management team's compensation was more in India compared to family firms globally," said Dr Nupur Pavan Bang, Associate Director, Thomas Schmidheiny Centre for Family Enterprise.
According to the report family businesses used three core strategies to address the immediate impact of COVID-19, to respond to the challenges and opportunities it presented, and accelerate the involvement of family members to prepare the plan for the future:
They took steps to address the impact of the pandemic not only on their family and business, but on the welfare of society as a whole, and the needs of all their stakeholders including employees, customers, suppliers and local communities.
Family businesses were found to be 42 per cent more likely to implement business transformation strategies when compared to non-family businesses during the pandemic. Family businesses with multiple generations in the firm were 45 per cent more likely to implement a business transformation strategy when compared to single-generation family firms.
Further, the report identifies two key factors that influenced families' strategy decisions: whether the business is led by a family or non-family CEO, and whether the ownership is distributed amongst a small or large number of family members.
(With inputs from IANS)