Coping with Adversity : Assessing Family Firms' Resilience to Exogeneous Shocks
By Nupur Pavan Bang, Tajuddin Malik, Sougata Ray, Ekin
Citation
Bang, Nupur Pavan., Malik, Tajuddin., Ray, Sougata., Ekin. (2024). Coping with Adversity : Assessing Family Firms' Resilience to Exogeneous Shocks .
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2024
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Abstract
Even though research on organizational resilience has advanced significantly, it often overlooks the varying resilience of different organizational forms in response to external shocks. To address this gap, we analyse resilience heterogeneity of family-owned, family- managed businesses and their counterparts in the context of a global crisis event. Grounded in stewardship theory and leveraging the socioemotional wealth perspective, we operationalize organizational resilience by examining deviations in firm performance relative to counterfactual performance across three critical phases: the “steady state” pre-shock, post-shock, and shock periods. We posit that family ownership and management act as key enablers of organizational resilience. Using a proprietary longitudinal dataset of 2,202 listed companies in India, we find robust evidence that both family ownership and family management significantly enhance organizational resilience. However, our analysis reveals that the positive impact of family management on organizational resilience diminishes in the presence of business group affiliation. Furthermore, we categorize firms into four cohorts based on performance trajectories – antifragile, robust, scarred, and fragile – and assess how family involvement influences resilience within each group. Finally, our study has policy implications, by highlighting the resilience and importance of providing support to family enterprises, given their ubiquity and economic importance, as they play a critical role in economic stability.

Sougata Ray is a Professor of Strategy and Entrepreneurship (Practice), Thomas Schmidheiny Chair Professor, and Executive Director of the Thomas Schmidheiny Centre for Family Enterprise, at the Indian School of Business (ISB). Earlier, he served at the Indian Institute of Management Calcutta for over two decades as a Professor of Strategic Management, a member of the Board of Governors, and Dean. He was also a senior-level executive at Infosys Technologies Limited for two years in a strategic role as Head of innovation Lab. He is an alumnus of Indian Institute of Management, Ahmedabad and the Indian Institute of Engineering, Science and Technology, Shibpur.

Professor Ray’s research interests have evolved over the years in understanding various facets of strategic management, entrepreneurship, innovation and the governance of firms and business groups in high-growth economies. Given the ubiquity of family firms in India and observing how family owners and leaders play a pivotal role in shaping the future of enterprises, he was gradually drawn into family business research. In recent years, under the aegis of the Thomas Schmidheiny Centre for Family Enterprise, he has been spearheading a mega programme towards developing a solid research-based understanding of family firms and business groups in India and South Asia. He has also been leading a research programme in the areas of social entrepreneurship, corporate sustainability strategy and practices, bottom-of-the-pyramid initiatives, and involvement of corporations in inclusive and sustainable development.

Professor Ray is one of the most prolific and cited home-grown strategy scholars in India. He has been publishing regularly in reputed scholarly journals and presenting in leading peer-reviewed international conferences. He has received over half a million dollars in research grants, several prestigious research and teaching awards, and numerous award nominations.

He blends over three decades of experiences in diverse roles – as an international-quality academic, research, and institution builder, alongside  hands-on corporate managerial and governance roles as an executive, member of the Board of Directors, and co-founder of startups.. He has been an advisor to numerous medium and large corporations, family businesses, and startups, and he has served as Principal Consultant to leading international development agencies. He currently sits on the governing and advisory boards of several listed and unlisted companies, startups, and social enterprises.

Professor Ray has taught in numerous executive education programmes and has designed and conducted many workshops exclusively for owner-managers, entrepreneurs, and C-level executives of companies in India, Asia, Middle East, Nordic and Scandinavian countries. Over the years, he has led over thirty C- level executive delegations to countries on every continent for high-level meetings with the ministers, high-ranking officials, multilateral agencies such as the WTO and ILO, Chambers of Commerce, MNCs, industrial organisations, research labs, and academic institutions.

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Sougata Ray