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.

Citation

James Cater III, J. and Beal, B. (2014), "Ripple effects on family firms from an externally induced crisis", Journal of Family Business Management, Vol. 4 No. 1, pp. 62-78. https://doi.org/10.1108/JFBM-02-2013-0006