The spread of COVID-19 creates unprecedented challenges for the business sector. In a recent work (“The Role of Family Ownership during the Covid-19 Pandemic“) we find that during the Covid-19 pandemic in Italy, Family Firms fared significantly better than other firms throughout the pandemic period. The outperformance is driven by a more efficient use of labor resources since Family Firms care more about employees and have stronger connections with them. For a related topic see also “Natural Disasters as a Source of Entrepreneurial Opportunity: Family Business Resilience after an Earthquake” where we study the performance of Family Firms around a disastrous earthquake in 2009. Following the earthquake, Family Firms performed better than nonfamily firms.
What affects the ability of entrepreneurs to face pandemic challenges? In a recent work (“The Relationship Between Entrepreneurial Optimism and Business Recovery During the Covid-19 Pandemic“) we study how optimism shaped entrepreneurs’ actions and beliefs during the first wave of the COVID-19 outbreak in the UK. Optimistic entrepreneurs were more likely to innovate and make organizational changes to their firms. Specifically, optimistic entrepreneurs experienced higher revenue growth during the pandemic. Collectively, our findings shed light on the psychological underpinnings which explain why some firms prosper and some others struggle in the wake of an external shock.
Overall, firms with stronger connections with employees and with optimistic entrepreneurs are more able to face the challenges of a pandemic period.