While all families are different, each shares a sense of connection. While these are intangible, family ties provide foundations of commitment, which can be priceless in the world of business, writes Dr Giovanna Campopiano.

The emotional core at the heart of family firms is often a source of strength and resilience in hard times, driven by a shared and deeply rooted sense of purpose and reward. The fact of the matter is, when it comes to family, it’s personal. Each individual is driven by the same ambitions and values. The overarching aim is to create a legacy; leaders of family firms are determined to pass the baton on with a business in better condition than when they took over.

This degree of personal investment can create a fantastic culture and drive performance, but can also lead to a different form of entrepreneurialism. Leaders have an eye on how their actions impact those around them, so can be more conservative when it comes to growth and change; acutely aware of how bad decisions or failure could impact life for family members outside, as well as inside, work.

Over the last 18 months, success stories of organisations who have made it through the turbulence of the pandemic have surfaced– some have even thrived. This is fantastic, but not all that surprising. You don’t have to look too far back in history to see firms have struggled through many different crises and survived. But, how? An agile and eclectic approach seems to be key. Successful firms are quick to adapt to continuous change.

Many manage to reinvent themselves, driven by the challenges they face and making the most of the resources available within the business, and the wider community. But how do family businesses fare when it comes to change, given the additional, emotional challenges they face?

It may be trickier for some, but it is certainly possible. Entrepreneurial actions require a specific mindset to embrace change and take risks. However, this attitude depends on how firmly a business is embedded within a community. Family businesses have particularly interesting dynamics, and are often connected to different ‘communities’ both inside and outside of the physical firm. For instance, if two or more family members are involved in the governance and/or management of the firm, family embeddedness has proven to have a significant role (though at times downplayed or neglected) in affecting business decisions - especially in new venturing initiatives. So, why do some family businesses thrive by continually pursuing new entrepreneurial ventures, while others stick to efficient and productive goals to strengthen their position in a specific market?

Some may say it is due to family firms being less innovative, stuck to a specific business path. However, my research would suggest it’s more important to consider the personal circumstances and make up of family businesses. I have found there are three factors that can trigger or restrain entrepreneurial endeavours: family transitions, resources, and norms.

Family transitions are destabilizing events or processes that can change the judgment and exploitation of potential entrepreneurial opportunities. Consider, for instance, the time when children complete their studies and decide whether to contribute to the family business, rather than leave for new job opportunities elsewhere. Similarly, sudden health issues or the death of founders or incumbents might paralyse the business in some cases, but also offer new chances for the business or for the entrepreneurial family.

Resources are another key factor. Within a family business environment, resources (both tangible and intangible) can often be overlooked. This can range from things like financial capital available in the family, previous experiences of family members involved in the business in both managerial and non-managerial positions, as well as the social relationships and network that the family can rely upon. Moral support is key here too.

Finally, there are family norms. These are the unwritten rules that characterise the dynamics and interactions within a family, which are reflected in business decisions. A family that emphasises a zealous work attitude, which is transmitted from parents to children, generation after generation, might prioritise business goals over family ones. Family values, in general, spill over onto the business and can stimulate entrepreneurial behaviour - or discourage it.

Having a business embedded within the family can be both a strength and a liability. While there is a risk that non-family members may feel like outsiders as interactions and values that characterise family relationships are not necessarily their own, if dealt with professionally, managers can benefit from instilling a family-like working environment which avoids any in-group / outsider divide. Involving every member of the organization in business model innovation and in new entrepreneurial opportunities can empower non-family employees and make them feel equally valued.

Creative and productive ideas can emerge from individuals at any level of the organisation and from outside influences. Nurturing good relationships and creating an engaged working environment is key to making any change possible.

Dr Giovanna Campopiano is a visiting senior lecturer in Entrepreneurship and Strategy at Lancaster University Management School.