Coronavirus, a shock to our economy. But family businesses are better able to resist the blow


by Mario Daniele Amore and Guido Corbetta (Source:

The Covid-19 pandemic represents a profound shock to our economic system. But the impact is not the same for all businesses. Among the listed companies, those with a family-owned structure nevertheless performed better.

Financial markets during the pandemic

The pandemic caused by Covid-19 violently shook i financial markets global. At the end of April, the American S & P500 index recorded losses of around 12 percent compared to the values ​​at the beginning of the year. During the same period, the Italian stock exchange lost more than 25 percent of its overall value. Even though the financial markets have started to recover, theimpact of the pandemic on the real economy will be profound.

The negative reaction to its diffusion in fact adds up to an initial shock on the supply side, represented by the difficulty of finding intermediate goods through the global value chains, to a increase generalized uncertainty with negative repercussions on the demand side. Various growth forecasts for Italy indicate that GDP will contract by around 9 percent in 2020.

several studies are on therefore by questioning the factors capable of improve the ability of companies to respond to a shock of these proportions. For example, recent analyzes show that, along with financial strength pre-Covid, a relevant factor lies in the quality of the corporate governance and in the activities of corporate social responsibility, which improve the relationship between the company and stakeholders and therefore reduce the perceived risk of companies during the pandemic.

Because family businesses are better

Empirical evidence also suggests that a resilience factor resides in the identity of the shareholders: during the spread of the pandemic, the companies controlled by families achieved an equity performance significantly higher than those with other proprietary structures. Their results are even better when the family is present in both shareholder and leadership.

These dati emerge from an analysis of 350 listed companies in Italy between January and the end of April 2020. For each of them, daily stock prices and a methodology capable of to remove performance differences attributable to size and sector. Many family and non-family businesses in the sample made substantial losses.

However, on average, family members have ato equity performance of 8 percentage points higher than that of non-family businesses. These results do not appear to be influenced by concomitant factors, such as the level of debt and profitability pre-Covid, which have been used by other scholars to explain stock market performance during the spread of the virus.

Owning families tend to have long-term horizons in their economic choices and often have the fate of their companies at heart because of a strong socio-emotional attachment to the business and a tendency to preserve their reputation of the family. The stable nature of the relationships between owner-families and employees or other stakeholders has probably made it possible to benefit from an organizational climate more suited to dealing with a crisis and privileged access to external resources.

These elements help reassure the market that the company will work optimally to recover from the crisis and who will have adequate means for to do it. And the greatest resilience of family businesses during the current pandemic seems to lie precisely in involvement active of the family in the company’s leadership.

The implications dell ‘analyzes can be various. But one emerges above all: the Italian economic system would need to have a greater number of listed family businesses. This would also allow entrepreneurial families to undertake growth paths ambitious. To this end, greater attention is needed towards policy tools aimed at incentivizingequity rather than corporate debt.

Entrepreneurial families, for their part, can prepare themselves with systems of governance able to to balance roles and responsibilities. The skills and family ties, combined with one governance transparent, they can offer a powerful weapon against the virus.

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