Determinants of rural and urban family firm resilience

Journal of Family Business Strategy 1 (2010) 155–166

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Determinants of rural and urban family firm resilience Katherine E. Brewton a,*, Sharon M. Danes a,1, Kathryn Stafford b,2, George W. Haynes c,3 a

Department of Family Social Science, University of Minnesota, 290 McNeal Hall, 1985 Buford Avenue, St. Paul, MN 55108, United States Department of Consumer Sciences, The Ohio State University, Campbell Hall 265B, 1787 Neil Avenue, Columbus, OH 43210, United States c Department of Agricultural Economics and Economics, Montana State University, 210E Linfield Hall, Bozeman, MT 59717, United States b

A R T I C L E I N F O

A B S T R A C T

Article history: Received 14 September 2009 Received in revised form 4 August 2010 Accepted 5 August 2010

Data from 311 rural and urban family firms from the National Family Business Panel (NFBP) were used to investigate the relative contributions of human, social, and financial capital resources, normative and non-normative disruptions, and federal disaster assistance on family firm resilience. Results indicate that the sets of social capital and disruption variables were significantly and negatively related to firm resilience for rural firms, while perceiving the business as a way of life was significantly and positively related to firm resilience for urban firms. Federal disaster assistance was negatively related to firm resilience for both rural and urban firms. Additional findings, conclusions, and implications of findings are discussed. Published by Elsevier Ltd.

Keywords: Rural Urban Resilience Family firms

Although extensive literature exists on components of family firm survival, that literature focuses primarily on structures and roles in the firm rather than resource processes in both family and firm (Danes, Lee, Stafford, & Heck, 2008). And yet, several studies have found that a family firm’s capacity to access human, social, and financial resources and effectively plan for predictable as well as unforeseen circumstances was positively related to family firm sustainability (Danes, Stafford, Haynes, & Amarapurkar, 2009; Hammond, 2003; Haynes, Walker, Rowe, & Hong, 1999). Sirmon and Hitt (2003) described this pooled set of family resources as survivability capital and indicated that it can help sustain the business during poor economic times or during such disruptions as unforeseen circumstances. Given Sirmon and Hitt’s (2003) survivability capital description as integration of owning family’s human, social, and financial capital, one might argue that survivability capital is a type of social capital akin to resilience capacity. Resilience capacity can be built in both family and firm. Resilience capacity created in families is permeable and transmitted across boundaries to the firm (Danes, Lee, Amarapurkar, Stafford, & Haynes, 2009; Patterson, 2002). If owning families have built a stored capacity for resilience, when it encounters a disaster or acute disruption, the store of trust and

* Corresponding author. Tel.: +1 612 625 1981; fax: +1 612 625 4227. E-mail addresses: [email protected] (K.E. Brewton), [email protected] (S.M. Danes), [email protected] (K. Stafford), [email protected] (G.W. Haynes). 1 Tel.: +1 612 625 9273; fax: +1 612 625 4227. 2 Tel.: +1 614 292 4564; fax: +1 614 688 8133. 3 Tel.: +1 406 994 5012; fax: +1 406 994 4838. 1877-8585/$ – see front matter . Published by Elsevier Ltd. doi:10.1016/j.jfbs.2010.08.003

creativity in problem solving can be more easily and quickly tapped and adapted to the new situation. Since family firm sustainability depends, in part, upon how it adapts to change, it is important to understand in detail the resource transactions that compose owning family resilience because it increases the probability of successfully responding to change. It is also important to investigate the relative contributions of various family resource types, the processes used to access those resources, and the effect of risk exposure to normative and non-normative disruptions. Owning family resilience and adjustment to disruptions is core to the Sustainable Family Business Theory (SFBT), which was the theory that guided this research (Danes, Loy, & Stafford, 2008; Stafford, Duncan, Danes, & Winter, 1999). The resource stocks of family members and the processes they use in accessing these family resources during times of change caused by disruptions may facilitate or inhibit family firm sustainability (Danes, 1999; Danes, Reuter, Kwon, & Doherty, 2002). Using the metaphor of stock and flow in economics and system dynamics modeling, a stock of resilience capacity can be built in either the family or firm, and that capacity can flow across permeable boundaries when it is needed. During times of disruption, managers must reconstruct resource processes within both firm and family to incorporate adaptations that each system has made to accommodate the disruptions (Danes, Haberman, & McTavish, 2005). SFBT locates entrepreneurship within the social context of the community in which the firm operates (Danes, Lee, et al., 2008). Thus, resilience of rural and urban firms is compared because it is believed that community context contributes to resilience capacity of family firms when exposed to a natural disaster. Dahlhamer (1998) concluded that recovery of a particular firm from a natural

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disaster depended on how neighborhoods, critical infrastructure, and the greater community were affected by a natural disaster rather than on their direct physical damage. Although, there is evidence that dynamics of rural and urban family firm survival differ (Olson et al., 2003), it is not known whether components impacting family firm resilience capacity differ by rural/urban location. Family firms comprise a larger portion of rural economies compared to urban economies and rural economies are smaller than urban ones. Well-being of rural communities and citizens is closely linked to the health of their locally owned family firms (Besser, 2002; Flora, Sharp, Flora, & Newton, 1997). Many of those rural family businesses are small businesses and Habbershon (2006) states that family influence is more extensive in smaller firms. Family firm distribution among industries is different in rural and urban areas, as well; agriculture and small family firms comprise a large share of rural economies and both are riskier than average. The purpose of this study is to investigate the relative contributions of human, social, and financial capital resources, normative and non-normative disruptions, and federal disaster assistance on family firm resilience for rural and urban family firms. Previous research about the impact of natural disasters on small firms has primarily been conducted in urban locations after single disasters, and at one point in time with small convenience samples. To overcome methodological limitations of current research and to extend it to less understood populations, such as rural communities, this study utilized the longitudinal National Family Business Panel (NFBP) data combined with national data on natural disasters and federal disaster assistance to investigate the relative contributions of human, social, and financial capital resources, normative and non-normative disruptions, and federal disaster assistance on family firm resilience. Unique contributions of this study to existing literature include the utilization of a resource process approach to the study of resilience within small family firms, baseline firm financial data prior to a disaster, a longitudinal, national, and representative household sample of family firmowning families and small firms, and inclusion of federal disaster assistance and owning family resilience over time. 1. Literature review 1.1. Family firm resilience Family firm resilience conceptually refers to the reservoir of individual and family resources that cushions the family firm against disruptions and is characterized by individual and collective creativity used to solve problems and get work done (Conner, 1992; Danes, 1999, 2006). Patterson (2002) stated that a family’s belief in their ability as a group to discover solutions and new resources to manage challenges is the cornerstone of resilience. Although Gimeno, Labadie, Saris, and Mayordomo (2006) identified the concept as family management, they, too, indicated that family management practices often enhance the family’s capacity to identify, accept, and resolve differences with a natural by-product being increased business competitiveness and, therefore, better financial performance. Family firm resilience is further defined as the perception of family members about decision-making and activity coordination that fits together harmoniously into group knowledge and action for the firm (Stafford & Avery, 1993). Family firm resilience is not a stable trait, but rather an ongoing, often emergent process (Patterson, 2002). At any point in time, the flow of resilience capacity, represented by congruity among family members, can vary depending upon current conditions at the family/business interface. Lack of resilience undermines efficiency and reduces cooperation (Danes, Loy, et al., 2008).

When families are functionally strong, they have a stock of resilience that buffers both the family and firm against stresses emanating from internal and external disruptions (Danes, Loy, et al., 2008). Family interactions, such as family adjustment strategies, are actually implicit rules guiding member behavior and are the result of rationally making previous financial and social decisions and devising solutions to problems (Moen & Wethington, 1992). These behavior patterns or implicit rules can be drawn upon when needed and enhance a family firm’s resilience capacity. If families have built a stored capacity for resilience, when a disruption is encountered, the store of trust and creativity in problem solving can be more easily and quickly tapped and adapted to new situations (Danes et al., 2002). Family resources may be more than the sum of resource endowments because resources can be combined in different ways in varying circumstances (Danes, Stafford, et al., 2009). The family business literature implies that management decisions about resource exchanges are made within the boundaries of either the family or business. Recent research, however, finds support for the SFBT premise that resources are shared between business and family systems, and that family businesses are, indeed, cross-system organizations (Paul, Winter, Miller, & Fitzgerald, 2003). Olson et al. (2003) determined that family business success depends upon family processes and responses to disruptions rather than simply how the owner manages the business. In fact, responses to disruptions had a greater effect on family firm revenues (20% of variance) than the family’s resources (2%). Winter, Puspitawati, Heck, and Stafford (1993) found that nearly half of home-based businesses used or traded family resources to spend more time on business. Fitzgerald, Winter, Miller, and Paul (2001) discovered that female business owners are more likely to reallocate family resources to the business than male business owners. And Haynes, Rowe, Walker, and Hong (2000) found that use of family financial resources in the business occurs more when the business owes money to financial institutions or when the owner is older, more experienced, and without children. Disaster studies describe resilience as intrinsic resources that can be called upon to help maintain or regain pre-disaster levels of functioning and manifest successful adaptation. Successful adaptation to disasters involves more than simply restoring the built environment because the effects of disasters are complex and longlasting. Firms often experience change in social, political, and economic relationships and capability, which are part of the community context in which family firms operate (Alesch, 2005). Although it is possible to maintain or regain pre-disaster levels of functioning or adapt successfully, it is also possible for resilience to foster business growth (Paton, Violanti, & Smith, 2003; Violanti, Paton, & Dunning, 2000). For example, owning family social capital resources, a critical component of resilience capacity, can be relied upon to uphold social norms and reciprocate favors (Zuiker, Katras, Montalto, & Olson, 2003) for the firm’s benefit. Family resources are rooted in strong family ties (Heck et al., 2006). Owning families accumulate ‘‘stocks’’ of individual and family resources, such as family integrity and personal qualities, that can reduce the consequences of family firm disruptions. Several studies point to family fortitude as one way to survive tough economic times in family firms (Hammond, 2003; Weigel & Ballard-Reisch, 1997). Thus, material and human resources of owning family members are key when examining natural disaster recovery (Hammond, 2003). The dependent variable in this study is family firm resilience. Since family influence is more extensive in small firms, this variable represents the resilience capacity of the owning family. The owning family is the vehicle by which the resource stock (human, social, and financial capital) that composes the owning

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family’s resilience capacity is transported across permeable boundaries between family and firm during times of change or disruption. Owning family resilience in this study is akin to Sirmon and Hitt’s (2003) survivability capital. 1.2. Responses to disruptions Natural disasters test family firm systems (Hammond, 2003). Disaster literature indicates that having family and social supports is positively related to resilience (Paton & Johnston, 2001), and that three processes contribute to family firm resiliency: Family functional integrity, family structural integrity, and the family’s established pattern of adjusting to disruptions. Family functional integrity has five components: Adaptation, partnership, growth, affection, and resolve (Smilkstein, Ashworth, & Montano, 1982). If family functional integrity is high then trust, creativity, and openness often ensue, resulting in greater responsiveness and resilience among family members (Danes & Morgan, 2004; Stewart & Danes, 2001). It distinguishes families that hold together from those that do not (Sawin & Harrigan, 1995). Family structural integrity is congruity about decision-making and activity coordination between the family and firm. It is concerned with the extent to which different aspects of the firm, both individually and collectively, fit together harmoniously at the family/firm interface to further family group knowledge and action. Lack of congruity undermines efficiency, reduces cooperation, and decreases resilience. According to the SFBT (Danes, Lee, et al., 2008; Stafford et al., 1999), responses to disruptions are changes made in one system (e.g., firm or family) to accommodate the needs of the other system when unusually heavy demands exist. These responses can be measured by adjustment patterns. Adjustment patterns are known to kick-in automatically when family firms encounter a disaster or other acute disruption (Miller, Winter, Fitzgerald, & Paul, 2000). Variables that have been shown to influence adjustment patterns include family and firm size, number of positions held in the family and firm, age, gender, and education of family and firm managers, family income, whether the firm is home-based, whether the family is entrepreneurial, and whether family and firm finances are intermingled. Haynes et al. (1999) found that two-thirds of small family firms intermingled family and firm finances. 1.3. Comparison of rural and urban family firms Community and cultural contexts are important to take into account when researching family resiliency (Hawley & Dehaan, 1996). Previous work using 1997 NFBP data suggested distinct differences between rural and urban firms. Agriculture firms comprised a larger share of rural economies than urban economies, and rural agricultural firms grossed approximately 50% more revenue than urban agricultural firms despite similar firm size. When the same comparison was made for nonagricultural firms, rural businesses were slightly smaller but grossed less than half as much revenue (i.e., $4.4 million vs. $6 million annually) as urban firms. Chang and Falit-Baiamonte (2002) and Zhang, Lindell, and Prater (2009) stated that type of industry may affect firm recovery from a natural disaster. Recovery is often more difficult for retail businesses. Customers may be impacted by the same disaster as a business and, thus, tighten their budgets, or retail competitors may not be impacted by the same disaster and, thus, customers patronize the competitor instead of the recovering business. The neighborhood in which a business resides also plays a role. For example, in rural communities, there may be fewer competitors nearby, and a disaster may not severely decrease business revenue. However, in urban communities, more competition between businesses may exist, and a business impacted by a natural

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disaster could be at greater risk of losing both customers and revenue. Firm survival dynamics varied for rural and urban firms. In the NFBP, 74% of rural family firms that closed between 1997 and 2000 did so for personal or family reasons. A smaller percentage of urban family firms closed for personal or family reasons. Olson et al. (2003) found that rural firms were less successful than urban firms and that rural owning families derived less income from their firms than urban owning families. Social contributions of rural firms tend to be different from those of urban family firms. Rural firm owners have reported more community citizenship than owners in urban areas (Besser, 1998), and when firms were not able to contribute much in terms of financial donations due to limitations in size and scope, they tended to provide support through donations of time and expertise (Niehm, Swinney, & Miller, 2008). Thus, social capital in rural communities garners more resources from rural business owners for their communities (Besser, Recker, & Agnitsch, 2008). 2. Sustainable family business theory SFBT (Fig. 1) is the systems-based theory that guided this work. It emphasizes family business system sustainability and posits that short-term business viability is a function of both business achievements and family functionality (Danes, Lee, et al., 2008; Stafford et al., 1999). SFBT has a number of theoretical propositions (Danes, Lee, et al., 2008). The proposition that best addresses the purpose of this study is that patterns of resource and interpersonal transactions in business and family systems during times of stability create a resilience capacity that serves as a foundation for addressing stresses during times of change or disruption such as a natural disaster (Danes, 2006). Another is that systems interact by exchanging capital (i.e., resources and constraints) at their boundaries during times of disruption. And, conflicts arise when there is a mismatch between demands and resources that can be used to meet those demands. A key SFBT contribution is its positioning of family and firm resources; it considers all resources that owning family members contribute to family firm sustainability, whether they work directly in the family business or not, and focuses on how family members exchange resources across systems (Danes, Lee, et al., 2008; Stafford et al., 1999). Other theories used to guide family business research, such as the resource-based view, hold that family resources in firms constitute unique resources and capabilities for competitive advantage, but they only focus on family resources within the firm (Danes, Lee, et al., 2008). SFBT is compatible with the resource-based view but it is broader. Unlike the resource-based view of the firm, SFBT provides a mechanism to examine aspects of the owning family and business owner that are not within the firm, yet affect achievement and long-term sustainability. Also unique to SFBT is its bridging of human, social, and financial capital in defining family capital (Danes, Stafford, et al., 2009). Resources are objects, personal characteristics, conditions, or energies that are valued in their own right or because they act as conduits to the protection or achievement of valued goals (Hobfoll, 1989). Human, social, and financial capital may be inputs to the firm directly from family or indirectly via the community host in which the firm operates. SFBT recognizes that resources may have simultaneous positive or negative effects on firm performance depending on the circumstances. Constraints impose limits on resources and combinations of resources available. The process of drawing on family capital stock creates a change in that capital stock (either enhancement or reduction), that when added to the original level, becomes the current period’s output, which in turn becomes the input for the next time period. Family capital is captured in SFBT operationally by both stock and flow

[(Fig._1)TD$IG]

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Fig. 1. Sustainable family business theoretical model.

measures over time (Danes, Stafford, et al., 2009). Understanding the stocks as well as the flow of owning family capital is critical to understanding long-term sustainability because Danes, Stafford, et al. (2009) found that access to and utilization of family social capital over time was more important for sustainability than the level of family capital. Since this study uses panel data, the researchers introduced a set of controls to represent the stock of family capital resources from family and business from which the owning family could draw upon in times of disruption. Human capital is considered the most fundamental form of capital and is vested in individuals. In part, the accumulation of social capital within families has its roots in the human capital or attributes of its individual family members. Experience, ethnicity, education, time, and energy are examples of human capital present within families. Because human capital consists of skills and abilities vested in people, human capital is not only genetically determined, but it can be augmented via investment over time. These endowments or stocks can be taken as given in cross-section data, but not in panel data. Since the purpose of the study was to investigate the relative contributions of human, social, and financial capital resources, normative and non-normative disruptions, and federal disaster assistance on family firm resilience for rural and urban family firms, a hierarchical regression was performed on parallel rural and urban firms. Thus, the first hypothesis of this study introduces the effect of human capital on resilience capacity after entering the controls. H1. Human capital resources explain greater variance in resilience over and above that explained by controls for urban and rural family businesses. Family social capital is goodwill among family members and between owning family members and their communities that can be input to the family and its firm to facilitate action (Danes,

Stafford, et al., 2009). Social capital is embodied in relationships among people and formal institutions. Social capital can be relied upon to uphold social norms and reciprocate favors (Danes, Lee, et al., 2008). In business, as in the family, social capital exists in the form of trust, respect, love, altruism, and in-kind exchanges between and among employees, managers, and leaders within the business. It may be the case that families who foster and grow their human capital may be more able to germinate, transfer and/or flourish this social capital within their businesses. For example, family members who trust each other may simply transfer that trust to their business setting, whether or not a particular family member is in or out of the business arena. Those working in the business may be able to allow more freedoms and less control over each other and over their nonfamily employees. Similarly, those family members out of the business may be able to allow similar freedoms and less control over those in the business. Thus, Hypothesis 2 introduces the effect of social capital on resilience capacity. H2. Social capital resources explain greater variance in resilience over and above that explained by controls and human capital variables for urban and rural family businesses. Financial capital is composed of financial assets and physical assets. Assets are tangible or intangible and are considered applicable to the payment of one’s debts. Financial assets are cash or assets that are readily converted into cash. Physical assets are less readily converted into cash. Family financial capital includes such tangibles as money, credit, assets, and investments of all kinds. Historically, more attention has been paid to family financial capital than other forms of family capital and that is why the set of capitals that composes family capital (Danes, Stafford, et al., 2009) includes financial capital in it. The third hypothesis introduces the effect of financial capital on resilience capacity.

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H3. Financial capital resources explain greater variance in resilience over and above that explained by controls, human, and social capital variables for urban and rural family businesses. Family and firm structure in SFBT overlap resources and constraints because they are thought to be both. Family roles and rules not only refer to who is in and out of the family, but who and how members lead, manage, and distribute family resources (Danes et al., 2002), as well as how families assign roles to members, how bonded members are, and how the firm defines itself relative to the outside world (Danes & Olson, 2003). Family roles and rules may facilitate and constrain the use of resources. Core to family roles and rules is shared meaning that includes a family’s values, norms, and beliefs (Haberman & Danes, 2007). Some roles and rules are outwardly evident to family members, but some are deeply ingrained within family culture and members act on them unconsciously. Disruptions in SFBT have been classified as normative and nonnormative. Normative disruptions are those that occur because of changes in family structure or events such as holidays or ceremonies. Non-normative disruptions are those that are not foreseeable or highly unusual. An example would be a natural disaster that forced temporary or permanent firm closure (Danes, Lee, et al., 2008). During times of change, resources that contribute to creative problem solving around disruptions are garnered from each system to manage their response to change (Danes et al., 2002). Other family firm models do not explicitly recognize that processes are different in times of change versus stability. Nor do they acknowledge explicitly that processes within each system must be reconstructed during times of change to incorporate adaptations that each system has made to accommodate the disruptions. Processes during times of stability take place in each system and can be thought of as routine or standard operating procedures creating a stock of family resilience. However, owning families and their firms are affected by environmental and structural change, and during these times of disruption, exception routines may have to be substituted (Stallings, 1998). For owning families who have used a pattern of adjustment strategies during high demand times in either family or firm, their resilience capacity is higher than those families without a pattern because the strategy pattern can more easily kick-in during acute disruptions. Danes, Lee, et al. (2009) identified this pattern as resilience processes occurring at the intersection of family and firm and concluded that those processes may be more important to firm sustainability than availability of family capital. Thus, disruptions (both internal and external) representing risk exposure were entered following resources based on positioning of the construct in SFBT. H4. Disruptions explain greater variance in resilience over and above that explained by controls, human, social, and financial capitals for urban and rural family businesses. SFBT frames owning families as the mortar that connects communities, individuals, and firms and makes them function effectively. The owning family acts as an intermediary between the community and firm, and provides a fertile environment of community values, attitudes, and beliefs that serve as inputs to firm culture and may add further meaning to the firm’s direct interaction with the community. Members of family and business systems interact with the community, and the community, in turn, may provide various inputs to help sustain the family firm. Positive synergy that exists between the family firm and their community cultures during stable times is a potential adaptive capacity for both the firm and the community during times of acute disruption, such as a natural disaster (Astrachan, 2002), which is particularly true in rural areas where firms are major rural development resources (Besser, 2002).

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It is common for traditional family firm performance literature to assume that individuals make economic decisions in a social vacuum (Aldrich & Zimmer, 1986). In contrast, the SFBT places the family firm within the social context of its community (Danes, Lee, et al., 2008). Community in SFBT is conceptually defined as a collective interaction within a geographic boundary rather than simply a group that shares a few common characteristics (Kulig, 2000). Federal disaster assistance was entered last into the analysis, as these resources come from the community context external to the business and are only available due to exposure to a natural disaster. This assistance is representative of the collective action of the external environment of the community to restore lost resources which added to the resilience of the resilience capacity of the owning family contributes to the long-term sustainability of the family business. H5. Federal disaster assistance explains greater variance in resilience over and above that explained by controls, human, social, and financial capital, and disruptions for urban and rural family businesses. 3. Methods 3.1. Sampling procedures and description In the mid-1990s, a group of academic scholars from 17 universities combined their resources to form the Family Business Research Group and conduct research on the impact and interplay between managing a business and managing a family. The sampling frame for the 1997 wave of the NFBP (Winter, Fitzgerald, Heck, Haynes, & Danes, 1998) and its 2000 wave (Winter, Danes, Koh, Fredericks, & Paul, 2004) was households. To qualify for the study, business owners had to have been working in the firm at least one year, spend at least 6 hours per week (or a minimum of 312 hours annually) working for the firm, and live in a household with a least two members. One 30-min telephone interview was administered to the business owner and one 30-min interview was administered to the household manager. The household manager was defined as the individual who tends to take care of meal preparation, laundry, cleaning, scheduling of family activities, and overseeing of child care. None of the respondents in this study had difficulty identifying the household manager. When a household manager and business owner were the same person, a 45-min combined interview was administered. Data were collected for 708 households in 1997. Three years later, in 2000, follow-up interviews were conducted with the 1997 respondents (Winter et al., 2004). In households in which two different people were interviewed in 1997, an attempt was made to interview each individual again in 2000. When only one individual in a household was interviewed in 1997, only that individual was re-interviewed in 2000. To maintain participant interest in the study and accurate contact information over the three-year period, the research group mailed households one-page summaries of research findings every six months. Data were gathered for 553 households in 2000, which was 78% of the original sample of 708 households. Reasons for non-participation in 2000 included unlocatable households, refusal, death, and maximum number of phone calls placed to households. This study additionally applied at least one of these criteria used in the literature to define family firms (Heck & Trent, 1999): owner perceived their business to be a family business, at least one other family member was a major business decision maker, at least one other family member was an owner, at least one other family member worked in the firm, and future family ownership was considered likely. Seventeen percent of owners met one of these definition criteria, 28% met two, 37% met three, 15% met four, and 3% met all five criteria. A subsample of 311 family firms was selected for this study with the following characteristics: the firm was still open in 2000,

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families. Firm owners were questioned about seven tensions in home life generated as a result of firm issues (i.e., role clarity, decision authority, ownership equality, fairness of compensation, failure to resolve firm conflicts, unfair workloads, and competition for resources between family and firm) (Danes, 2006; Danes, Lee, et al., 2008; Danes, Loy, et al., 2008; Danes & Olson, 2003). Responses ranged from one (no tension at all) to five (a great deal of tension), and were reverse coded and summed to create a firm resilience measure (a = .708). Higher scores indicated greater firm resilience because owning families had structured their interactions around the firm in such a way that harmony and congruity would create a family environment to problem solve effectively as a foundation for the firm’s continued growth and productivity. This ability to problem solve effectively in times of stability creates a resilience capacity to address stresses of normative and nonnormative disruptions. Scores ranged from 18 to 35. The average resilience score for urban businesses was 32.89, and for rural businesses, it was 32.31 (Table 1).

the business owner who was managing the firm in 1997 was still managing the firm in 2000, and complete information was obtained from business and household managers. The largest sample firm had 250 employees. Based on that number, sample family firms would be classified as small businesses by the U.S. Small Business Administration (2009). Approximately 53% of firms were located in urban communities and approximately 47% of firms were located in rural communities. Firms were classified using Urban Influence Codes (UICs), which distinguish metropolitan counties from nonmetropolitan counties (USDA Economic Research Service, 2003). The codes are as follows: (1) Counties in metro areas of 1 million population or more, (2) Counties in metro areas of 250,000 to 1 million population, (3) Counties in metro areas of fewer than 250,000 population, (4) Urban population of 20,000 or more, adjacent to a metro area, (5) Urban population of 20,000 or more, not adjacent to a metro area, (6) Urban population of 2500 to 19,999, adjacent to a metro area, (7) Urban population of 2500 to 19,999, not adjacent to a metro area, (8) Completely rural or less than 2500 urban population, adjacent to a metro area, and (9) Completely rural or less than 2500 urban population, not adjacent to a metro area. Urban firms in this study had UICs of five or lower, and rural firms had UICs of six or higher. The rural and urban firms participated in different industries. Rural firms were most often involved in agriculture (33%), retail (20%), and finance (16%) industries. Urban firms were most often involved in finance (27%), retail (24%), and other industries (22%).

3.2.2. Controls The process of drawing on family capital stock creates a change in that capital stock (either enhancement or reduction), that when added to the original level, becomes the current period’s output, which in turn becomes the input for the next time period. Thus, Time 1 indicators of structural and functional integrity were two study controls representing the stock of family resilience from which to draw upon in Time 2. Time 1 family structural integrity was measured in the same way as it was in Time 2, was also included for methodological reasons because in longitudinal analyses it is important to have a Time 1 measure of the dependent variable as a control. The introduction of the Time 1 as an independent variable introduces autocorrelation into the regres-

3.2. Measures 3.2.1. Owning family resilience The dependent variable in this study was owning family resilience in 2000, measured by the structural integrity of owning

Table 1 Descriptive statistics for rural and urban firms. Variable

Rural Range

Controls Gender of firm owner Family structural integrity Family functional integrity Generation of firm Firm size Resources Human capital Education of firm owner Weekly hours worked Other jobs of firm owner Social capital Meaning of firm Fin./Tech. assistance to community Crossover of family firm tasks Help without payment Skipped family tasks Hire temporary help Meet firm cashflow with household income Financial capital Household income from firm Gross revenue increased 1996–1999 Disruptions Normative (internal stressors) Firm problems Positive family stresses Non-normative (natural disaster) External risk exposure Community resource transactions Federal disaster assistance (PERI) Family firm resiliency – DV

Urban Mean

SD

Range

Mean

SD

0–1 13–35 9–25 1–4 1–218.5

.21 31.46 20.40 1.41*** 4.80

.409 4.18 3.21 .73 18.31

0–1 18–35 5–25 1–3 1–190

.35* 32.89** 20.85 1.12 8.31

.478 2.76 3.30 .40 23.14

8–20 5–70 0–1

13.79 44.70 .32**

2.41 17.08 .47

8–20 1–70 0–1

14.85*** 42.26 .18

2.28 17.20 .39

0–1 1–5 1–5 1–5 1–5 1–5 0–1

.34 2.03 2.85 2.11 2.87 2.00 .20

0–250000 0–1

42884.14 .62

4–18 0–2

8.01 .09

6E+008

4E+007

0–807 18–35

34.13 32.89

0–1 1–5 1–5 1–5 1–5 1–5 0–1 0–300000 0–1

4–18 0–1 4E+008 0–139 21–35

.27 2.40** 3.28*** 2.53*** 3.12* 2.25* .27 28950.38 .55

8.97* .08 6612041*** 7.63 32.31

*p < .05, **p < .01, and ***p < .001, asterisks were placed beside the higher of the two means.

.45 1.16 .97 1.01 .88 .95 .44 37096.23 .50

3.68 .27 34795528 28.29 3.11

.48 1.06 .87 1.00 1.02 .99 .40 48250.35 .49

3.03 .30 95528824 140.15 2.76

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sion model. Urban firms had significantly higher structural integrity compared to rural firms (Table 1). Internal reliability of the measure was acceptable (a = .738). Family functional integrity in Time 1 was a variable that represented various dimensions of family functional integrity that the family literature indicate are essential: adaptability, partnership, growth, affection, and resolve of the family (Smilkstein et al., 1982). These five dimensions when combined in an index create an elasticity and flexibility within the owning family that allows them to maneuver a balance between states of stability and change. The variable, as an index, is identified in the literature as family APGAR (each letter represents the first letter of the concept that the question measures); it connotes a sense of trust, creativity, and openness that brings a family’s interactions to a higher level of responsiveness. The measure distinguishes between families that hold together and families that fall apart (Sawin & Harrigan, 1995). Responses were provided on a five-point scale ranging from never (1) to always (5); a sample item is ‘‘You are satisfied that you can turn to your family for help when something is troubling you.’’ Internal reliability of the measure was acceptable (a = .813). Two additional controls were generation of the firm and firm size. The generation of firm ownership was measured by asking the firm owner if he/she was a first, second, third, or fourth (or more) generation firm owner. Rural firms were significantly more likely than urban firms to be multiple generation firms (Table 1). Firm size was computed by summing the number of employees working for the firm. Previous research suggested that the larger the firm, the greater the complexity of relationships affecting family firm resilience (Bryant & Zick, 2005). Gender of the firm owner was included because Danes, Lee, et al. (2009) found that firm resilience differed for male- and female-owned firms. Gender of the firm owner was a dichotomous variable; ‘‘1’’ represented female and ‘‘0’’ represented male. Urban firms were significantly more likely than rural firms to be owned by females. 3.2.3. Resources – Human capital The resources in the family firms were examined based on the SFBT: human, social, and financial capital. Human capital resources included education of the firm owner, weekly hours worked by the firm owner, and whether or not the firm owner worked other jobs in addition to working at the family firm. Urban business owners had significantly more education than rural owners (Table 1). Rural and urban business owners worked a similar number of hours in the firm, but rural owners were significantly more likely to be juggling a second job (Table 1). 3.2.4. Resources – Social capital Social capital measures used in this study included two variables on the value orientation of the family firm. These two variables are included because Gimeno et al. (2006) argued that family firms needed to meet owner expectations as well as economic criteria in order to be considered successful. These measures reflect the manner in which the firm positions itself in the community. To measure value orientation, firm owners were asked a single item about how they would describe themselves as a firm owners; ‘‘1’’ meant that the firm was a way of life, and ‘‘5’’ meant that the firm was primarily a way to earn income. If a score was less than three, it was coded as ‘‘1,’’ meaning that the firm was considered a way of life; if a score was more than three, it was coded as ‘‘0,’’ meaning that the firm was considered a way to earn income. In the second value orientation measure, firm owners were queried about the frequency with which they provided financial or technical assistance in community development and planning in the past three years. A five-point scale ranging from never (1) to

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very often (5) was used for this variable. Rural firm owners were significantly more likely than urban firm owners to report providing financial or technical assistance in community development and planning over the past three years. Social capital was measured by five scales that represented adjustment strategies. Adjustment strategies are changes made in one system (family or firm) to accommodate needs of the other system when unusually high demand exists (Danes, Lee, et al., 2008). These five measures indicated patterns in how owning families transferred resources across boundaries of family and firm in order to address stresses in the other system during times of stress. The five scales focused on family and firm crossover of tasks, receiving help in the firm without paying those who helped, skipped or deferred family tasks, hiring temporary help in the firm, and firm cash flow problems (Fitzgerald et al., 2001). Responses to all questions were on a five-point scale ranging from never (1) to always (5). Family and firm task crossover was computed by taking the average score of four items, two provided by the household manager and two provided by the business owner. Items were: ‘‘Family work usually completed at home is done at the business,’’ ‘‘Family members working in the business do more business tasks at home,’’ ‘‘The firm owner does business tasks at home,’’ and ‘‘Family responsibilities are taken care of at the business.’’ Rural owners used this adjustment strategy significantly more often than urban owners (Table 1). Internal reliability of this measure was a = 641. Help without pay was computed by taking the average score of two items, one each provided by household manager and business owner. Items were: ‘‘Family members, other relatives, or friends who usually do not work in the business help out in the business without pay,’’ and ‘‘Family members, other relatives, or friends help with the business without pay so you can spend more time with family.’’ Rural owners used this adjustment strategy significantly more often than urban owners (Table 1). Internal reliability of the measure was a = .563. Skipped or deferred family tasks was computed by taking the average score of three items: ‘‘Family members put off or skip routine household tasks to do business work,’’ ‘‘Family members get less sleep because they spend more time in the business,’’ and ‘‘Some household responsibilities are temporarily shifted among family members so more time can be spent in the business.’’ Rural owners used this strategy significantly more often than urban owners (Table 1). Internal reliability of this measure was a = .655. Hiring temporary help for the firm or home was computed by taking the average score of two items. Items were: ‘‘The family hires (paid) temporary help for either business or home,’’ and ‘‘You hire (paid) temporary help for either home or business.’’ Rural owners used this strategy in high demand times significantly more often than urban business owners (Table 1). Internal reliability of this measure was a = .572. Business owners were also asked if they had met their firm cash flow problems in the past year by using household income to meet firm needs. This was a dichotomous variable (1 = used household income to meet firm needs). 3.2.5. Resources – Financial capital Financial capital variables included household income obtained from the firm and whether there was a firm gross revenue increase from 1996 to 1999. Gross revenue increase was a dummy variable where a ‘‘1’’ represented at least a 1% increase in gross revenue in 1999 over 1996. This latter variable measures the business growth over the three years. 3.2.6. Disruptions Disruption measures represented the risk exposure experienced by family firms and were categorized as normative (e.g., firm problems and family stress) and non-normative (e.g., external risk exposure to a natural disaster). Normative disruptions were

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significant in that regression and because previous literature indicated that community characteristics contribute to resilience capacity, parallel hierarchical regression analyses were performed for rural and urban family firms. The assumptions of hierarchical regression were met and no multicollinearity between predictor variables was observed. To test hypotheses, control variables were entered in the first block followed by human capital variables in the second, social capital variables in the third, financial capital variables in the fourth, disruptions in the fifth, and federal disaster assistance in the sixth. Model coefficients from the sixth model are reported with their corresponding F-statistics. Change in R2 is reported for each set of variables to evaluate specific contributions of those variables to family firm resilience. Hypotheses were tested using the F-statistics for the change in R2. After completing the rural and urban regression analyses, a Chow test (Chow, 1960) was performed to test for equality between the sets of coefficients in the two regression models. The null hypothesis for the Chow test assumes equality between the sets of coefficients, meaning no differences in coefficients between the rural and urban family firms.

measured using a six-item firm problems scale that focused on assessing customer needs, pricing products or services, finding qualified personnel, developing marketing strategies, understanding state and local regulations and laws, and understanding federal regulations and laws. Responses from firm managers ranged from not a problem (1) to major problem (5) and reliability of the measure was a = .687. Rural owners reported significantly more firm problems than urban owners (Table 1). Family stress was measured by summing the number of positive stressful events that had occurred between Time 1 and Time 2, including marriage, marital reconciliation, and retirement from work. External risk exposure was measured by amount of county natural disaster damages in 1999, provided by the Spatial Hazard Events and Losses Database for the United States (SHELDUS) (Hazards and Vulnerability Research Institute, 2008). The presence of frequent business problems or stress may lead to the development of a repertoire of adaptive responses to disruptions, thus increasing resilience (Jang, 2005). 3.2.7. Community resource transactions Federal disaster assistance reflected resources that came from external sources outside of the family firm. The measure for community resource transactions were provided by the Public Entity Risk Institute (PERI) (Public Entity Risk Institute, 2008), and were measured by federal disaster assistance paid to counties in 1999, reported in millions of dollars.

5. Results Table 2 presents the hierarchical regression results. The regression procedure included six regression equations. The final model coefficients are presented in Table 2 along with the change in R2 for each previous model. The F-score for the total model was significant for both rural and urban businesses; R2 was .340 for urban businesses and .436 for rural businesses. The Chow test was statistically significant (p < .05), meaning that the null hypothesis

4. Analysis procedures When the study first began, a rural/urban dummy was included in a single regression analysis, but when it was statistically Table 2 Determinants of family firm resilience for rural and urban firms. Variable

Controls Gender of firm owner Family structural integrity Family functional integrity Generation of firm Firm size Resources Human capital Education of firm owner Weekly hours worked Other jobs of firm owner Social capital Meaning of firm Financial/technical assistance in community Crossover of family and firm tasks Help without payment Skipped family tasks Hire temporary help Meet firm cashflow with household income Financial capital Household income from firm Gross revenue increased 1996–1999 Disruptions Normative (internal stressors) Firm problems Positive family stresses Non-normative (natural disaster) External risk exposure Community resource transactions Federal disaster assistance (PERI) Model R2 Model F-statistic * ** ***

p < .05. p < .01. p < .001.

Rural

Urban Change in R2

B

SE

Beta

Change in R2

.281***

.232 .303 .179 .442 .001

.426 .073 .064 .505 .009

.040 .336*** .214** .063 .005

.219***

.005

.061 .003 1.004

.089 .013 .582

.050 .016 .143

.007

.017 .177* .192** .046 .009 .009 .027

.084**

.986 .238 .101 .167 .019 .233 .625

.425 .198 .231 .222 .233 .007 .524

.170* .092 .034 .060 .007 .084 .091

.051

.004 .133

.010

.024 .773

.143 .408

.015 .136

.021

.121 .106

.069 .683

.133 .012

.000

.038

B

SE

Beta

.654 .289 .173 .269 .011

.552 .055 .069 .308 .012

.086 .388*** .178** .063 .066

.026 .013 .444

.092 .015 .504

.020 .069 .067

.119 .475 .624 .143 .155 .028 .193

.483 .207 .250 .241 .287 .239 .492

.006 .828

.146 .441

.281 .042

.061 .769

3.443E .016

009

.000 .008

.332*** .004 .089***

.039 .149

*

.436 5.236*** (d.f. = 21, 146)

*

.016

1.090E .003

009

.002

.025 *

.166

.340 3.487*** (d.f. = 21, 163)

.017*

K.E. Brewton et al. / Journal of Family Business Strategy 1 (2010) 155–166

that the sets of coefficients in the two regression models are equal can be rejected. The rejection of the null hypothesis implies that there are indeed differences between the rural and urban family firms. Thus, it was appropriate to examine these differences by performing two separate regression equations and comparing the coefficients in the models. The amount of variance in family firm resilience that was explained by the control variables was .281 (p < .001) for rural businesses and .219 (p < .001) for urban businesses. Both Time 1 family structural integrity and Time 1 family functional integrity were significant and positively related to family firm resilience for rural and urban businesses. When structural and functional integrity increased, so did businesses’ resilience capacity in Time 2. Of the two types of integrity in 1997, structural integrity, of course, had the higher coefficient, but functional integrity had a high coefficient for both rural and urban businesses. Generation of firm, firm size, and gender of the firm owner were not statistically significant in either model. Hypothesis 1, which stated that human capital resources explain greater variance in family firm resilience over and above that explained by controls for rural and urban firms, was not supported. Human capital variables did not contribute to family firm resilience over and above the contribution of the control variables in either model. Hypothesis 2, which stated that social capital resources explain greater variance in resilience over and above that explained by controls and human capital variables for urban and rural family firms, was partially supported. The set of social capital variables contributed significantly to the explanation of firm resilience for rural, but not urban, firms. For rural firms, social capital variables explained 8.4% of the variance in resilience over and above that explained by the control and human capital variables. Of note is the negative relationship between firm resilience and both financial/ technical assistance provided to the community and crossover of family and firm tasks. The more that rural firm owners provided financial/technical assistance to their communities, the less resilient they were. Also, the more that firm owners completed family tasks while working at the firm, and the more they took family business work home, the less resilient firms were. The lone significant social capital variable for urban businesses was meaning of the firm. The more that urban firm owners viewed their businesses as a way to earn income instead of a way of life, the more resilient they were. Hypothesis 3, which stated that financial capital resources explain greater variance in resilience over and above that explained by the controls, human and social capital variables for urban and rural family firms, was not supported. The negative relationship between gross revenue increase between 1996 and 1999 and resilience was marginally significant for both rural (p < .073) and urban (p < .064) businesses. Hypothesis 4, which stated that disruptions explain greater variance in resilience over and above that explained by controls, human, social, and financial capitals for urban and rural family firms was partially supported. The set of disruption variables contributed to the explanation of resilience for rural, but not urban, firms. The variables explained 8.9% of the variance in resilience over and above the previously entered variables for rural firms. Normative disruptions, such as firm problems, were especially important contributors to rural firm resilience. The more rural firms experienced problems, the lower their resilience capacity. Hypothesis 5, which stated that federal disaster assistance explains greater variance in resilience over and above that explained by controls, human capital, social capital, financial capital, and disruptions for urban and rural family firms, was supported for both rural and urban businesses. There was a

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statistically significant relationship between federal disaster assistance and firm resilience for rural and urban firms. The relationship was negative, so county-level receipt of federal disaster assistance was associated with less firm resilience. The effect was larger and more significant for rural firms. 6. Discussion and application The purpose of this study was to investigate the relative contributions of human, social, and financial capital resources, normative and non-normative disruptions, and federal disaster assistance on family firm resilience for rural and urban family firms. The study utilized the longitudinal NFBP data combined with national data on natural disasters and federal disaster assistance. Parallel hierarchical regression analyses were conducted for rural and urban firms. Study findings provided support for the SFBT’s proposition that states that resource and interpersonal transactions during stability create a resilience capacity that serves as a foundation for addressing stresses during times of disruption such as a natural disaster. Time 1 family structural and functional integrity had positive influences on Time 2 family firm resilience for both rural and urban firms. These indicators of resilience capacity assisted owning families in successfully managing life circumstances and contributed in positive ways to increasing adaptability after a disruption (Cadell, Regehr, & Hemsworth, 2003; Danes, Lee, et al., 2008; Lyons, 1991; Paton, 1994; Paton & Johnston, 2001; Patterson, 2002). The statistically significant resource variables for rural firms had a negative relationship with resilience. The more that rural family business owners had contributed financial or technical assistance to the community and the more that work tasks were brought home and family tasks were done at work, the less was the reported level of resilience. With urban firms, when the business was considered a way of life as opposed to a way to earn income, then the level of resilience increased. Findings also highlighted differing contributors to rural and urban firm resilience. The set of social capital variables significantly contributed to rural firm resilience, but not urban firm resilience. Previous research suggests that there are reasons why families choose to live and operate businesses in particular communities. Rural communities, specifically, may draw and keep residents because of the social capital owned by the community, either by single members or the community as a whole (Basile & Cecchi, 2005). Because social capital is often more readily available in rural communities than urban communities, it is not surprising that the set of social capital variables significantly contributed to rural, but not urban, firm resilience, and may play an important role at the time of a disaster. Two individual social capital variables, providing financial/ technical assistance to the community and crossover of family and firm tasks, were significantly and negatively related to firm resilience for rural but not urban firms. This finding suggests that rural business owners’ orientation in times of stability may be toward the community because personal service to a community by a business owner means that a community may loyally patronize and promote a business in return (Besser, 1998). When a natural disaster occurs, however, rural business owners may feel torn between the clear needs of their family or firm and those of the community. The result may be lower family firm resilience, especially if the owner attempts to balance the needs of all. The negative relationship between crossover of family and business tasks and resilience for rural firms suggests that if a rural manager’s pattern of work/family balance crosses system boundaries so that family tasks are completed at the firm or firm tasks are completed at home, resilience could be reduced at the time of a

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disaster. Balance will likely be lost because demands in both systems tend to be high following natural disasters and usual patterns of work/family balance may no longer be effective for them. A significant and negative relationship was found between federal disaster assistance and resilience for rural and urban businesses. This finding generally supports previous claims that disaster assistance helps individuals recover, but not businesses (Alesch, Holly, Mittler, & Nagy, 2001), and that disaster assistance is negatively related to disaster recovery (Dahlhamer & Tierney, 1998; Haynes, Danes, & Stafford, 2008). Our findings add to previous research by suggesting that this negative relationship is especially true for rural businesses, as the coefficient for rural firms is approximately 5 times larger than the coefficient for urban firms. Natural disasters have the potential to disrupt firm owners’ routine or standard operating procedures. As a result, firms may become less resilient, and in turn, firm recovery could be compromised. Firm owners and household managers could benefit from mitigation planning that incorporates the study findings. For example, rural firms may be especially tied to their communities under normal conditions, and at the time of a natural disaster, may feel torn between needs of family/firm and community. Scenarios that help rural owners plan and make decisions when these tensions occur would be useful. One purpose of scenario building is to identify potential disruptions and how resource processes would change under those conditions. Not all, but many, rural family firms are farms or ranches or satellite businesses that support various facets of the agricultural industry. Thus, the findings of this study need to be grounded in a discussion of the differences in farm businesses and other small businesses. The U.S. Small Business Administration (SBA) (2009) estimates that there are approximately $23.1 million small businesses in the U.S. and about $6.1 million of these businesses hire one or more employees. The U.S. Department of Agriculture (USDA) estimates that there are approximately $2.2 million farms and ranches (USDA, 2009). The $23.1 million small businesses contribute about 50% of the total gross domestic product (GDP) and employ about 50% of the employees in the U.S. The $2.2 million farms and ranches contribute approximately 4% to total GDP and employ less than 1% of employees in the U.S. (SBA, 2009). The primary difference between small firms (e.g., a local retail store) and a farm or ranch is the importance of legacy and the resulting influence of public policy in the agricultural industry. The immersion into the public policy arena differentiates them from the general small business. The agricultural business lobby emphasizes two important differences between agricultural and other businesses: (1) agricultural production is impacted by weather uncertainty, and (2) a secure food supply is important for national security. Based on these two important points, the Federal Government has been immersed in agricultural business for several decades and agricultural business advocacy has remained under the control of the USDA, while small business advocacy has remained under the control of the SBA. Small businesses must comply with many rules and regulations; however, they are recipients of few loan guarantee or grant programs. The SBA administers loan guarantee programs (most notably, the 7(a) loan guarantee, which provides a guarantee to lenders if the borrower defaults) and several small grant programs, primarily for socially disadvantaged business owners. In contrast, farmers (and their lenders) can utilize loan guarantees from the Farm Services Agency (FSA); farmers can borrow money directly from the FSA, they receive farm subsidies (direct payments, counter cyclical payments and loan deficiency payments) from the FSA and receive cost shares for conservation practices from the

Natural Resource and Conservation Service (NRCS). In addition, farmers and ranchers receive subsidies for crop and livestock insurance from the Risk Management Agency (RMA). In short, the farming (and to a lesser degree the ranching) business is the recipient of financial support from the Federal Government and is subject to the whims of public policy. While FSA, NRCS and RMA provide the subsidies to agricultural firms, they are also responsible for compliance. Clearly, agricultural businesses are driven by public policy, while general small firms are more market driven. Most importantly, agricultural businesses have many programs to help them survive and succeed and special bankruptcy provisions (chapter 12) if they do not survive, while small businesses must fall back on the bankruptcy laws if they are not successful. Overall, family firm resilience for small family businesses depends on the functional integrity of the family system, especially in situations such as the one studied here, where risk exposure to internal and external disruptions are taken into consideration. The family APGAR instrument was used to measure family functional integrity in this study. It might be utilized by consultants of family businesses as one indicator of family resilience. Family APGAR provides firm owners with a valid, reliable, confidential means of monitoring family functional integrity, and is also fast and easy to score. Family APGAR strengths include its ease of administration and its focus on perception of satisfaction. The instrument is a self-report, which means it can be self-administered and results kept confidential. It can be used by families with children or without them. Family APGAR has also been found to be valid and reliable with families from ethnic minorities. A further advantage of the family APGAR instrument is that Smilkstein et al. (1982) has given permission without charge to use the scale for research, education, and personal information.One reason for lack of significance of some of the resource variables in the regression may be that they were measured three years prior to the dependent variable of family firm resilience. So the fact that a number of the variables were significant for rural firms is something to note. The SFBT states that during times of disruption, managers must reconstruct resource process within both firm and family to incorporate adaptations that each system has made to accommodate the disruptions (Danes et al., 2005). The negative relationships with resilience that one might have expected to be positive may reflect the fact that the businesses have not reconstructed resource processes to accommodate the adaptations made as a result of the risk exposure. Resilience capacity is difficult to build or rebuild in the presence of boundary, role definition, or commitment issues that were core to the measurement of resilience in this study. Consultants who work with family businesses who have been exposed to a natural disaster will need to assist the owning family members in reconstructing resource processes. Acknowledgements This paper reports results from the 1997 and 2000 Cooperative Regional Research Project Survey. The National Family Business Survey (NE 167) was partially supported by the Cooperative States Research, Education, and Extension Service (CSREES); U.S.D.A, Baruch College, the experiment stations at the University of Hawaii at Manoa, University of Illinois, Purdue University (Indiana), Iowa State University, Oklahoma State University, University of Minnesota, Montana State University, Cornell University (New York), North Dakota State University, The Ohio State University, Utah State University, and the University of Wisconsin-Madison. This material is based upon work partially supported by the National Science Foundation under Grant No.

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