Natural disasters as a source of entrepreneurial opportunity: Family business resilience after an earthquake

• Author: Carlo Salvato,Mario Daniele Amore,Alessandro Minichilli,Massimo Sargiacomo
• DOI: http://doi.org/10.1002/sej.1368
• Date: 01 December 2020
• Published date: 01 December 2020

RESEARCH ARTICLE

Natural disasters as a source of entrepreneurial

opportunity: Family business resilience after an

earthquake

Carlo Salvato

1

| Massimo Sargiacomo

2

|

Mario Daniele Amore

1

| Alessandro Minichilli

1

1

Bocconi University, Department of

Management and Technology, ICRIOS

Research Center, SDA Bocconi School of

Management, Milan, Italy

2

Universitá G. D'Annunzio Chietí-Pescara,

Department of Management and Business

Administration, Pescara, Italy

Correspondence

Carlo Salvato, Bocconi University,

Department of Management and Technology,

ICRIOS Research Center, Röntgen 1, 20136

Milan, Italy.

Email: carlo.salvato@unibocconi.it

[Correction added on 12 October 2020, after

first online publication: ‘SDA Bocconi School

of Management’has been inserted to the first

affiliation.]

Abstract

Research Summary: What type of firms are more likely to

survive or even thrive in disaster events such as earth-

quakes, wildfires, and the COVID-19 pandemic? We investi-

gate whether family ownership and industry positioning

affect firms' ability to capture opportunities for business

recovery after a natural disaster. We analyze the perfor-

mance of Italian family and nonfamily firms around a disas-

trous earthquake in 2009. Following the earthquake, family

firms performed better than nonfamily firms, especially

when multiple family members were involved as owners.

Moreover, family ownership is beneficial in industries highly

dependent on the public sector. Our findings provide evi-

dence on the superior resilience of family firms by illustrat-

ing the characteristics that allow firms hit by disaster events

to seize posttraumatic entrepreneurial opportunities for

recovery and growth.

Managerial Summary: The purpose of this study was to

understand whether a possible explanation of family firms'

superior longevity is their resilience to mass emergencies

and their ability to transform post-crisis threats into entre-

preneurial opportunities. We found that family firms per-

formed better than their nonfamily peers after the

earthquake that hit Central Italy, and especially the area

Received: 16 June 2016 Revised: 8 September 2020 Accepted: 12 September 2020 Published on: 28 September 2020

DOI: 10.1002/sej.1368

© 2020 Strategic Management Society

594 Strategic Entrepreneurship Journal. 2020;14:594–615.wileyonlinelibrary.com/journal/sej

around L'Aquila, in 2009. During disaster events, family

ownership resources—focused on the long term and the

desire to transfer the business to future generations—

provide the firm with the social and emotional capital

needed to address the hardship. Moreover, family firms that

operated in industries closer to the public demand lever-

aged the family proximity to politics, further enhancing the

processes of recovery and opportunity identification.

KEYWORDS

entrepreneurial opportunities, family firms, natural disasters,

resilience, social capital

There is continuing interest in understanding the longevity of family firms across generations and their ability to per-

petuate an entrepreneurial orientation (Ciravegna, Kano, Rattalino, & Verbeke, 2020; Fernandez Perez & Colli, 2013;

Sharma & Salvato, 2013). A recurring explanation is grounded on family firms' superior ability to respond to adversi-

ties such as disaster events and mass emergencies, often referred to as their resilience (Chrisman, Chua, &

Steier, 2011; Danes et al., 2009; Memili, Welsh, & Luthans, 2013; Minichilli, Brogi, & Calabrò, 2016). These events

disrupt entrepreneurial resources, but long-lasting family firms seem to be capable of turning adversities into oppor-

tunities (Roux-Dufort, 2007; Williams & Shepherd, 2018). How controlling families behave and perform in post-

disaster entrepreneurship may thus be an overlooked manifestation of their resilience.

To explain the resilience of familyfirms, some authors focused on the importance of family social capital (Arrègle,

Hitt, Sirmon, & Very, 2007; Carr, Cole, Ring, & Blettner, 2011),and on the enduring interpersonal relationships among

family members sharing coherent goals (Lim, Lubatkin, & Wiseman, 2010), which shape decision-making (Chua,

Chrisman, & Sharma, 1999). Others have focused on the close collaboration of family members to keep trans-

generational control (Zellweger, Kellermanns, Chrisman, & Chua, 2012), which contributes to preserving the common

family-centered socioemotional wealth endowment (Gómez-Mejía, Cruz, Berrone, & De Castro, 2011; Gómez-Mejía,

Haynes, Nunez-Nickel, Jacobson, & Moyano-Fuentes, 2007).Finally, yet other authors have focused on how the con-

nections among family, firm, local community, and government systems support family firm responses to adversity

(Danes et al.,2009). Taken as a whole, thiswork—whether focused on familysocial capital, socioemotional wealthpres-

ervation, or family connections—has generated important insights into why firms that successfully survive and thrive

across centuries are often family owned and controlled. These insights revolve around the unique roleof the relation-

ships amongmembers of the controllingfamily, and between thefamily and external stakeholders, in facinghardship.

However, these explanations have not been unambiguously conceptualized and empirically tested. Conceptually,

prior literature paradoxically reveals both positive and negative effects of family social capital and socioemotional

wealth. Strong family ties provide essential affective and economic resources (Chirico & Salvato, 2008; Salvato &

Melin, 2008), but they may also be redundant, thus limiting the quantity and variety of resources to face adversity,

and the family firm's ability to capture postcrisis entrepreneurial opportunities (Mariotti & Delbridge, 2012; Maurer &

Ebers, 2006). The desire to preserve socioemotional wealth prompts family members to endure exceptional sacrifice

when facing adversity (Minichilli et al., 2016), but it may also induce conservative entrepreneurial decisions

(Kellermanns, Eddleston, & Zellweger, 2012).

Empirically, the longevity of family firms is not proof of their ability to face adversity because it may result from

alternative explanations (Chang, Chrisman, Chua, & Kellermanns, 2008; Nicholson, 2008). Existing empirical studies

are often cross-sectional, tracing resilience (a firm's ability to capitalize on adversities that may threaten its survival;

SALVATO ET AL.595