The history of the business world is inseparable from various crises that have come and gone—from the global financial crises of 1998 and 2008 to the COVID-19 pandemic. Almost all business sectors have felt the impact: large companies have collapsed, markets have fluctuated, and new business models have emerged from the economic ruins. However, there is one interesting pattern that continues to repeat itself: family businesses tend to be more resilient in the face of crises than non-family businesses.
A study conducted by Deutsche Bank International Private Bank (IPB) during the Covid-19 pandemic shows that many family businesses in Germany performed better during the crisis. Although business stock prices fell 23.7 percent during the first phase of Covid-19, companies without family shareholders experienced an even greater decline in stock prices—30.7 percent. “In the case of family businesses, the decline is on average smaller in a crisis, and the recovery is usually much faster
Why is this the case? Is it because of the culture, leadership, or long-term strategy that characterizes family businesses? Let’s explore the reasons behind their resilience.
Clear and Strong Vision
One of the main advantages of family businesses is their long-term orientation. Unlike public companies, which are often pressured by shareholders to pursue quick profits, family businesses tend to invest with a cross-generational perspective.
For the founders, this business is not just a money-making machine, but a legacy that must be preserved. They think about the sustainability of the business for their children and grandchildren, not just quarterly financial reports. This is what drives many family businesses to make decisions that may not be popular in the short term, but are actually beneficial in the future.
Emotional Bonds and High Loyalty
Family businesses have a rare intangible asset: emotional bonds. A sense of responsibility for the family’s good name makes its members willing to make greater sacrifices during a crisis.
This loyalty is also reflected in the work culture. Employees in many family businesses are not only considered workers, but part of the “extended family.” When difficult times arise, they are often willing to accept temporary salary adjustments or role changes for the sake of business continuity.
In Indonesia, Astra International is a prime example. Founded by the Soeryadjaya family, the company has successfully weathered various crises thanks to internal solidarity and high employee dedication.
Careful Financial Management
Family businesses are generally more conservative in managing finances. They tend to avoid excessive debt and always prepare cash reserves for emergencies. Although it seems traditional, this approach actually becomes a shield when a crisis hits.
While other companies are busy paying off debt, family businesses with healthy financial structures can be more flexible. They don’t need to rush into layoffs or sell off strategic assets because they have reserve funds.
Walmart, which started as the Walton family business, is a successful example. Their strict financial philosophy helped the company survive even in the midst of an economic recession.
There is also an interesting story from Groninger, a family business founded in 1980 that recorded sales of approximately US$303 million in 2023. The company manufactures medicines and cosmetics and is headquartered in Crailsheim, Baden-Württemberg, Germany. Jens Groninger is currently the CEO. He is the son of the company’s founder.
One of the keys to Groninger’s success is consistently filling a niche in the market with a business that has continued to grow over the years. Groninger continues to grow, not excessively, but little by little each year. Even though it generates profits, the company does not maximize them. The company also does not have to answer questions about the ups and downs of its share price.
Fast Decision-Making Process
Crises demand quick responses, and family businesses are usually more agile in making decisions. Without the complicated bureaucracy of large corporations, important strategies can be formulated in brief discussions among family members.
This flexibility allows them to adapt quickly. During the COVID-19 pandemic, many small family businesses in Indonesia immediately switched to online sales, while large companies took a long time to devise digital strategies.
Closeness to the Local Community
Many family businesses grow from grassroots and have strong ties to the surrounding community. These relationships become an advantage during a crisis, as local customers tend to remain loyal and supportive. For example, family culinary businesses often survive during a pandemic because customers feel an emotional connection. This “neighbor-to-neighbor” support becomes invaluable social capital.
Sticking to Values, Not Just Profit
Family businesses are often built on certain values—honesty, hard work, or excellent service. These principles serve as a compass when facing challenges.
Roche, a Swiss family-owned pharmaceutical company, for example, upholds the principle of long-term innovation. Instead of pursuing instant profits, they invest heavily in research. As a result, when the pandemic hit, Roche was ready with the healthcare solutions the world needed.
Regeneration and Innovation as the Key
Not all family businesses are automatically crisis-proof. Those that succeed are usually able to combine the wisdom of the older generation with the breakthroughs of the younger generation. The next generation brings fresh ideas, such as digitalization and modern marketing strategies. When combined with the prudence of the founding generation, a unique formula for resilience is created.
Keywords: family business
Meta description Family businesses have proven to be more resilient in the face of crises than conventional businesses. But why is that?
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