Ripple effects on family firms from an externally induced crisis

Abstract

Purpose – The purpose of this paper is to examine the experiences of family business owners in an externally induced crisis from a resource-based perspective. Design/methodology/approach – The paper employs a qualitative case study approach involving 22 firms. Findings – In the aftermath of the BP oil spill, a series of ripple effects impacted family firms both negatively and positively. The paper outlines five ways that family firms may improve company performance in crisis situations. Research limitations/implications – Although our study is rich in qualitative detail, it is important to recognize that the BP oil spill represents a unique crisis context and caution should be exercised in generalizing the study's findings. Practical implications – While ripple effects may be powerful at the industry and industry sub-group level, the paper provides evidence that family firms may overcome these external effects using one or more of five strategic initiatives: strong networking relationships, idiosyncratic local knowledge, flexibility, rapid response, and exercising trust with caution. Originality/value – The study validates the potential utility of a ripple effect model in the study of family businesses and externally induced crises. It has the potential to contribute to improving management response.

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