The unique structure of family businesses empowered them to respond to the impact of Covid-19 demonstrating resilience, according to the findings of a study.
The study report from the STEP Project Global Consortium and KPMG Private Enterprise has found that thefamily’s involvement and their long-term mindset had enabled them to demonstrate resilience in the face of the pandemic, which has placed them in a key role to lead the economic recovery.
The report, titled ‘Mastering a comeback: How family businesses are triumphing over Covid-19’, includes insights from nearly 2,500 family businesses and more than 500 non-family businesses across 75 countries.
Thomas Schmidheiny Centre for Family Enterprise, Indian School of Business (ISB), being the only member from India conducted the survey in India.
INDIA
Referring to the Indian scenario, Nupur Pavan Bang, Associate Director, Thomas Schmidheiny Centre for Family Enterprise said: “Lower per cent of companies in India (29 per cent) took actions to reduce/eliminate labour costs when compared to the global average of 36 per cent,’’
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, he added.
Strategy
The report uncovers three core strategies used by family businesses to address the immediate impact of Covid-19, respond to the challenges and opportunities it presented, and accelerate family members’ involvement to prepare the plan for the future.
They were social responsibility, business transformation and exercising patience, the study showed.
Family businesses constitute the earliest and most common business model globally and range from local, small businesses to some of the world’s biggest companies like Wal-Mart and Heineken.
“Due to this range, different kinds of family businesses chose to deploy the three strategies at different times and in different ways,” the report said.
The Successful Transgenerational Entrepreneurship Practices (STEP) Project Global Consortium is a global applied research initiative that explores family and business practices within business families and generates solutions that have immediate application for family business leaders.