NC1030: Sustainable and Resilient Systems: Transformative Response to Disruptions by Families, Businesses, and Communities

(Multistate Research Project)

Status: Active

NC1030: Sustainable and Resilient Systems: Transformative Response to Disruptions by Families, Businesses, and Communities

Duration: 10/01/2021 to 09/30/2026

Administrative Advisor(s):


NIFA Reps:


Statement of Issues and Justification

The NC 1030 research team has conducted, and published research focused on family firms and policy for more than twenty years.  A panel of family business owners and operators have been studied longitudinally allowing the team to identify patterns over time along with factors contributing to long-term business success.  Recent research efforts by the team focused on economic, social, community, and technological disruptions along with natural disasters.  Working collaboratively as a multi-state team, the NC 1030 project has been successful in conducting research to inform policy makers and business owners regarding business recovery and demise.  It has provided valuable information to these stakeholders about the role of disaster planning and federal aid to disaster outcomes.  A final wave of this longitudinal study collected data in 2016 from family firms in business for over 20 years and were part of the original panel in 1997.  Findings suggested that the more a family business is involved in the community, the greater perceived success the business has achieved.  A paper titled “Owner and Community Involvement and Business Success in Small Family-Owned Business”, prepared by NC 1030 members from Nebraska, Hawaii, North Dakota and Utah, was presented at the Annual Meeting of the United States Association for Small Business and Entrepreneurship in 2020.  The 2019 Small Business Values Survey, developed by two members from Purdue, gathered data from 511 small and family business owners and operators on topics including copreneurial activity, technology and social media, socioemotional wealth, family and business functioning, adjustment strategies, work/family balance, disaster and crisis events, exit strategies and business financial information.  Manuscripts are in process utilizing this data set (Marshall & Wiatt, 2019).

 In this project renewal, we aim to continue and extend the previous NC 1030 research project objectives.  The research team plans to not only explore patterns of success and responses to disruptions, but also focus on transformative and adaptive change necessary to increase resilience and sustainability practices. We are entering an era of unprecedented disruption to economic and social systems due to climate change, social injustice and other systemic problems that require transformation to more sustainable and resilient approaches by families, businesses and communities. Our research team is specifically interested in mitigating the disruptive impacts to small to medium size enterprises (SMEs), their owners and the communities in which they operate.  A prominent and recent example of a major disruptive change has been the COVID-19 pandemic. Early reports on the financial impact of COVID-19 on small businesses is bleak. For example, Wilmoth (June, 2020) reports that two industries receiving a large share of the decline in employment were the leisure and hospitality industries. Restaurants and bars, many classified as small businesses, suffered declines in employment due to the pandemic (Wilmoth, June, 2020). When examining employment numbers among businesses during the pandemic, small business owners saw the sharpest decline (Wilmoth, May, 2020). 

 The abruptness of change to normal business activities due to the pandemic highlights the lack of resilience built into our current economic and social systems. A resilient system is characterized by redundancies, diversity, and feedback loops that enable it to withstand shocks and adapt when necessary. We are witnessing a convergence of highly disruptive events, amplifying the need for transformative change. This convergence will require crafting a new normal in our human constructed systems, to systems exhibiting greater sustainability and resilience. These changes will reinvent business practices, transforming to a system that supports well-being of human systems, including families, businesses and communities as well as the natural environment. In light of these realities, several research questions emerge: How resilient are current SMEs and communities? What characteristics enable them to proactively respond to major disruptions? How might SMEs and communities transform to not only survive, but thrive in an unknowable future?

 Over the next five years the NC1030 research team will address these questions and others, highlighting best practices for families, businesses, and communities for developing greater resilience and transforming to more sustainable supply chains and social systems. This work is essential due to the major disruptions currently being experienced and future ones to come. The applied nature of NC1030’s research efforts can support necessary transformative responses to ensure owners of SMEs can continue to operate, creating livelihood opportunities for themselves and others in the community as well as contribute to the overall economic health of these rural and small communities.

 Small businesses are the backbone of rural communities, but rural communities face a multitude of overlapping and interrelated sources of change and disruption. Some rural communities have found opportunities while others have not or are losing their economic strength and population. With this loss, further erosion of the economic base continues among the retail and service sectors. The increasing number of disruptions such as hurricanes, wildfires, coronavirus pandemic, and recent economic recession have increased the need to better understand small business survival and resilience in rural communities. The growth in numbers of small rural businesses remains low and existing businesses have experienced limited growth (Hertz, Kusmin, Marre, & Parker, 2014). It is not clear what factors may allow SMEs to effectively sustain operation during these challenging disruptions or if their performance differs by rural community economic and demographic factors. The Kellogg Foundation’s study of rural entrepreneurship (2003) suggests that “home-grown”, locally and regionally focused small businesses are a critical piece of rural economic development.

 Maguire and Cartwright (2008) present a view of resilience that is not only based on vulnerability but also on the inherent adaptive capacities of a community. They discuss the relationships between vulnerabilities (those things that weaken ability to respond to change), adaptive capacity (ability to cope with change) and social resilience (the ability to adaptively respond to change rather than simply return to a pre-existing state). They point out that lack of resilience plays a delaying role in reaching recovery while great resilience and adaptability leads to return to a pre-existing state more quickly.

This same relationship exists for the small businesses that operate within and between communities. They exhibit vulnerabilities and adaptive capacity that can enable them to respond positively to change, not just return to a pre-existing state. These businesses operate in a sort of partnership with their communities and the community population as well as with other businesses. They are inextricably entwined within communities, and closely tied to the well-being of the community of place. As such, the vulnerability and resilience of small businesses merits research attention because it reflects the vulnerability and resilience of the entire community.

There are many barriers to change and adaptation for SMEs.  Adaptive capabilities outline the capacity to adjust strategies and operations to minimize or avoid damage to the business. Adaptive capabilities typically involve resource integration, entrepreneurial learning, and strategic response planning (Jayathilake, 2015). Capabilities also play a mediating role on the relationship between resources and business performance (Lu et al., 2009). Entrepreneurial orientation (EO) is a principal mechanism for business growth.  EO is important because findings show that entrepreneurial businesses grow faster (Rausch et al., 2009).  As businesses grow, they acquire new resources and combine new and existing resources in value-creating ways.  Thus, the mechanism through which this process occurs is the business’s adaptive capability.  Further, it enhances a business’s proficiency at altering its understanding of market expectations (Lockett et al., 2011). As expectations have changed over time, it has been made clear that businesses and communities must collaborate to minimize poverty and environmental degradation within the community, increasing the business’s adaptive capabilities (Jimenez et al., 2011).

Understanding how capitals, capabilities, and ethnic identity shape outcomes of small and family business in rural communities to adapt to change can inform strategies and policies that are culturally appropriate (Valdivia et al 2008). Ethnic identity, race, and gender may influence the economic success of SMEs, and wealth creation in rural communities (Valdivia et al, 2012). It is also necessary to learn how community context (social, political, and environmental) impacts the subjective well-being of the family and business success. Studies have measured community climate and shown that it has an effect on how welcomed Latinos felt in rural communities (May et al, 2015) and on subjective well-being (Flores et al 2019).  Bourdieu’s theory of habitus and field (Raedeke et al, 2003; Clover, 2010) that places the focus on values and the network of institutions and organization of SMEs, and the capitals and capabilities, can inform adaptation of new businesses in rural communities (Raedeke et al, 2003; Valdivia et al 2009) in context of change. Life cycle, education, and experience shape human capital, while race, ethnic identity and culture shape cultural capital, and intersect with the social capital, shaping bonding, bridging and linking social capital shape the values and networks. These intangible capitals and the context shape the networks of SEMs.  Culture, ethnic identity, race and gender shape the networks, and the inherent ability to respond to disruptions and adapt to change (Valdivia et al 2012).

The NC1030 group of scholars has academic preparation from a variety of disciplines, enabling our research to tackle a variety of issues and addressing them from a diversity of perspectives. Several issues of interest to members on the team include: climate change impacts, geographies of inequality, gender and racial disparities, transformation to circular economy, rural and urban micro-pocket economies with particular vulnerability to sustainability impacts, to name a few. These topics will guide the work of the group to address the overarching project purpose: building sustainable and resilient systems through transformative change that will support well-being of families, businesses, and communities.

Stakeholders for the NC1030 research project include SMEs, including family-owned businesses; rural and small communities; USDA NIFA and society at large. These are the entities most likely to benefit from project outcomes. In some cases, stakeholder input was sought directly, and in others input was drawn from reports and literature.

 As for direct input, monthly questions were posed to SME family-based business owners via the Purdue Institute for Family Business website (purdue.ag/fambiz). Their responses support the needs for the work of NC1030. For example, in June of 2018, these business owners were asked how long it would take to recover if they suffered a major catastrophe (e.g. tornado, hurricane, fire, or flood). They responded as follows: 8% would go out of business, 25% would recover in 1-5 months, 42% in 6-12 months, and 25% would take more than one year to recover. In August, 2020 NC1030 members were informed that only 31% of farm and family businesses have a contingency plan in place; 38% of businesses did not have a contingency plan and 31% of businesses had only discussed it. Furthermore, in July 2020, results revealed that only 38% of businesses had an emergency fund in place, while 46% did not and 15% wanted to establish an emergency fund but had difficulty saving.  This input reveals the necessity of identifying best practices for SME to build greater resiliency, increasing their ability to adapt and transform in preparation for major disruptions to come.

 Indirect indicators that there is a need for the renewed NC1030 project come from recent academic and government publications (i.e., USDA Strategic Plan FY 2018-2022 and Report to the President of the United States from the Task Force on Agriculture and Rural Prosperity). In addition to the recent literature cited earlier in this proposal, key insights were drawn from Nystrom et al. (2019) which brings attention to the vulnerable global production ecosystem that supplies the food, fiber and fuel raw materials upon which human systems rely upon. Resilience is a key component to transforming to sustainable systems and reducing system vulnerabilities: “the capacity of a system to persist with and adapt to change, but also transform away from unsustainable social-ecological trajectories - has been suggested as a framework that coils assist in developing paths towards sustainability” (p. 98). A strong agricultural economy is imperative, as the underlying sector in most global supply chains. The proposed project renewal recognizes this importance as well as the need for economic development to foster prosperity in rural communities. Rural prosperity are key strategic initiatives of the USDA and are key outcomes of this project.

 When renewed, the NC1030 research group will work collaboratively on projects to reveal best practices for creating sustainable and resilient systems that enhance the well-being of families, businesses and communities. These best practices will be disseminated through journal publications and serve as material for outreach and engagement with relevant stakeholders (i.e. SME owners, community organizations). Likely impacts may include characterization of sustainability factors to inform how SMEs plan for and implement sustainability strategies; deeper understandings of comparisons of sustainable and resilient SMEs in rural vs. urban settings to inform public policy; further development regarding capacity to create a community-business sustainability framework that emphasizes new pathways by which interdependencies can be studied. These research outcomes could help small business owners prepare for continuity and help the system transform to greater sustainability and resilience.

 The current NC1030 research group has a diverse membership: long-term members mixed with new members; a range of academic disciplines represented, and of course members from eleven U.S. states. This diversity is a strength for many reasons, two are mentioned here. First, the research project will be addressed from multiple perspectives using a variety of research methods and analysis techniques as the group collaborates to better understand and find solutions around these issues. Second, members work well together and have a successful record of productivity over the past twenty years in conducting research to inform policy makers and sharing research outcomes with business owners regarding ways to recover from disasters and build long-term success.  The proposed project will build on these strengths by extending the knowledge base regarding sustainable and resilient systems and ways families, SMEs and communities can transform for greater prosperity and well-being.

 

Related, Current and Previous Work

This section reports work from related research on the problems facing small and medium size enterprises (SMEs), their owners, and the communities where they operate.  The focus is on transformative and adaptive change in response to high-level disruption that leads to success and sustainability of families, businesses and communities.  Accomplishments of the previous NC 1030 project (2017-2021) are reviewed. 

Small and Family Business Contributions in Rural Communities

According to the U.S. Small Business Administration Office of Advocacy (USSBAOA), small businesses accounted for 99.9% of all firms in 2020.  There were over 31.7 million small business in the U.S. employing 60.6 million people (SBA Office of Advocacy, n.d.).  However, timely data from unemployment insurance claims and new business applications during the COVID 19 pandemic reveal severe economic disruptions (Wilmoth, 2020, April). 

Rural entrepreneurship differs from urban entrepreneurship due to the very nature of rurality itself – low population density, geographic isolation, and proximity to a natural resource base – which impact the size and type of markets, labor force, social capital, and access to innovative knowledge and strategies (Brown & Schafft, 2011).  Entrepreneurship is a pathway for Americans to build independence and financial security for themselves, their families, and their communities.  Small businesses play a vital role in rural America by creating jobs and supporting the economic and social well-being of their communities.  However, rural small business owners face a number of challenges including awareness of and access to local business support programs, finding and retaining a workforce, lack of proximity to broadband services along with healthcare and other goods and services (Small Business Majority, 2019).  According to Rupasingha and Goetz (2013), a high presence of independently owned, local businesses statistically increases income and employment growth and decreases poverty rates in rural counties. 

While some rural communities are surviving, others are losing their economic strength and population due to a number of disruptions including natural hazards, the coronavirus pandemic, and economic recession.  Small businesses are a critical piece of rural economic development.  If rural communities are to remain in place, strong, and supportive of their citizens, they must offer economic opportunities including small businesses, entrepreneurship, and jobs.  SMEs must be able to provide creative response to these opportunities and to disruptive events in their community environment.  There is a need to extend our research to better understand small business survival and resilience in rural communities.

Community Capitals Framework

It is important to understand how and why people start businesses.  We know that an individual’s personal motivations, entrepreneurial orientation and intentions are involved.  Previous work by NC 1030 has utilized the Community Capitals framework (Emory & Flora, 2006; Flora & Flora, 2008).   This framework contends that communities possess seven capitals – human, social, cultural, political, built, natural, and financial.  Communities hold a given amount of stock of each capital and can experience changes in as well as interactions between capitals.  This framework provides a way to evaluate a community’s strengths and deficits with respect to the entrepreneurial efforts of businesses and to measure impact over time.  Utilizing Flora’s Community Capitals framework, the new project will work to understand the community impacts of small firms’ entrepreneurial response to change caused by disruptions. 

Adaptive Capabilities

In an uncertain, fast-changing world, how can firms compete for a share of the marketplace?  The answer lies in a firm’s adaptive capability, which is the ability to discover new knowledge and integrate it to commercialize new products or services (Bϋchel & Sorel, 2012). It also involves sensing, seizing, reconfiguring (Duarte Alonso et al., 2018), and negotiating adversity (Glover, 2010).

Firms that have adaptive capabilities possess assets that are difficult to duplicate. Companies that have more capabilities in the form of intangible assets (i.e., technology, managerial skills) are more agile than those with tangible assets (Augier & Teece, 2009). In particular, technologies allow for the flexibility to capitalize the market and adjust operations (Lin et al., 2020).  Collaboration and image are also intangible assets, as businesses are more agile if they engage with many stakeholders (Obeng, 2019) and if they have a strong brand orientation (Shuleska et al., 2016).

Women and Minority Entrepreneurship

Although minorities in general make up 32 percent of the population, they are estimated to be in the majority by 2045.  Minority business ownership currently represents 18 percent of the population.  By the time the Covid-19 pandemic and the Black Lives Matter (BLM) movement arrived, average revenue of these businesses had already declined by 16 percent in 2019 (U.S. Census Bureau, 2020, June).  These crises disproportionately affect both women and minority-owned small businesses (Fairlie, 2020). Many minority and women-owned SMEs, already in precarious financial states, and in addition to being located in industries such as service industries, are that much more vulnerable to disruption.  Fairlie (2020) providing initial impacts of the pandemic on small U.S. businesses in the United States found the largest decline of small active business owners on record, registering 3.3 million temporary or permanent closures (22 percent) from February to April 2020. While white business owner activity (withdrew from the workforce) dropped significantly (17 percent), minority-owned SMEs, specifically African American business owner activity plunged by a disturbing 41 percent followed by Latinx owner activity (a 32 percent drop) and Asian business owner activity (a 26 percent decline).

Exacerbated by systemic and long-standing inequalities, minority-owned businesses suffer from embedded, systemic racism resulting in limited networks and access to contracting opportunities (McKinsey & Company, 2020, May). They tend to face underlying issues that make it harder to run and scale successfully such as less access to capital and higher rates of loan denials (U.S. Senate Committee on Small Business and Entrepreneurship, n.d.).

Additionally, women and minority-owned businesses are more likely to be concentrated in industries most immediately affected by the pandemic, such as the service sector.  This segment of businesses is critical to our country’s economic prosperity and our community’s well-being. As evidenced by the disquieting data presented here, minority and women-owned small businesses are especially vulnerable to disruptions such as the ones presented by a pandemic and the racial inequities exposed by BLM. These businesses and their communities would greatly benefit from public, and private sector assistance.

Previous work by the NC 1030 research team found that women’s involvement in family businesses was positively related to business success (Lee, et al., 2010).  Small family-owned businesses headed by women were more likely to succeed than those headed by men (Haynes, et al., 2011).  The proposed project extends this research by looking more broadly at SMEs owned and operated by women and minorities. 

Socioemotional Wealth and the Culture of Collaboration

Some studies suggest family firms’ need for and predisposition to preserve socioemotional wealth (SEW) (non-financial aspects of family firms’ affective needs) explains decision-making differences that set them apart from non-family firms (Cennamo, et al. 2012; Dayan, et al., 2019).  Zellweger (2013) suggests family firms are characterized by collective or organizational mindfulness, manifesting a concern for firm reliability, effectiveness, a commitment to resilience and the capability to rebound from setbacks (Hu, et al., 2019).

Dayan et al. (2019) reason that SEW preservation is a mindful strategy available to family businesses in developing sustainable products and processes. We are currently investigating the influence of organizational mindfulness on family firms’ strategic decision-making, assessing whether SEW and a culture of collaboration can positively affect family firms’ strategic decision-making and enhance performance. Preliminary results show that a culture of collaboration and SEW are positively associated with higher performance. Mindful action would predict that business owning families, because of a common history, may form a strong foundation to weather adversity and be more concerned with long-term value creation.  A study planned for the next project will investigate the factors that impact the socioemotional wellbeing of a business, specifically exploring differences related to minorities and the context of a family business.  The next project will also focus on how the culture of collaboration, ethnicity, and gender influence the socioemotional wellbeing of the business.

Rural Small Business Recovery and Resistance to Natural Hazards

Previous research suggests that rural businesses have “more to lose” after a natural disaster and that women and minority owned businesses have a harder time recovering after a natural disaster. Plus, most disaster research has focused on coastal areas, which are increasingly more prone to hurricanes. However, disaster losses also occur in the more rural and agricultural regions of United States. For example, the number of disasters declared counties (unique) in 2015 were 737, and 900 and 937 in 2016 and 2017, respectively. From 2015-2017, 158 counties had a disaster declared all three years and 271 were the same counties in 2016 and 2017. These repeated disasters affect the recovery and resilience of small businesses and their communities. Disaster recovery is of particular importance in rural counties that face challenges in emergency preparedness and response due to lack of resources, remoteness, low population density, and communication issues (Rural Health Information Hub, n.d.). In fact, Cutter et al. (2016) found that rural counties, compared to urban counties, were less resilient to disasters. They found that rural counties were particularly weak in areas needed for small business recovery such as economic, institutional, and infrastructural drivers of resilience.

Sustainable Family Business Model

The Sustainable Family Business Model (SFBM) was developed and introduced by Stafford et al. (1999) who were part of the NC 1030 research team members. SFBM was created with the premise that family owned business sustainability was a function of both the business success and the family functionality. The SFBM was designed to be flexible where researchers could use the model to examine both systems the family and the business systems equitably by including key characteristics of both the family and business in their analyses (Stafford et al., 1999).  “The model recognizes each system as a viable social entity by acknowledging both the concrete resources of each system and the interpersonal transactions that occur within each system” (Olson et al., 2003, p. 643). 

Both the family and the business systems in the SFBM model are portrayed as purposive social systems (Stafford et al., 1999).  Determining if change is coming from within the family business or from the environment when a disruption has occurred is possible through the lens of this model. The SFBM recognizes that “at the interface of the family and business systems, both the family and the business respond to disruptions in their regular transaction patterns” (Stafford et al., 1999, p. 205) by exchanging resources across each of the systems. These disruptions can be either good or bad, but they do require a response from both the family and the business systems. Olson et al (2003) state that when family owned businesses are faced with a disruption like surviving an economic downturn one way to survive this disruption is to “dip into the family’s economic resources: using savings, liquidating investments to provide needed capital for the business, using unpaid family labor in times of pressure or asking family employees to take a cut in pay” (pp. 644-645). This suggests that both the family and the business systems may be forced to make adaptations when there are disruptions to either of the systems (Olson et al., 2003; Stafford et al., 1999).

While this new project will look more generally at SMEs, family businesses are included in this category.  Some studies may be based on the theory behind the use of this model.

Previous Research by NC 1030

The NC1030 Regional Project has enabled research on family and small business issues and made substantial contributions to the survival and success of these firms.  Working collaboratively, the NC 1030 team has accomplished research that informs professionals and policy makers working with family and small business owners.  The proposed project is highly feasible as demonstrated by past research accomplishments of the NC 1030 group.

Researchers at Purdue, Montana State, Utah State, Iowa State, and North Dakota State worked collaboratively on research focused on small business and family business recovery from non-normative disruptions.  Studies by members of NC 1030 examined the relationship between community capital and small firm success after Hurricane Katrina devastated the small businesses (and communities) along the Gulf coast.  These studies used the 2013-2015 Small Business Survival and Demise after a Natural Disaster Project (SBSD), a project funded by the National Science Foundation to examine the relative importance of direct disaster assistance to family-owned small firms on their survival and success while considering the components of their adaptive capacity after experiencing Hurricane Katrina. Findings from this research provided insights for business consultants, community or organizational leaders, and policy makers to recognize the association between community capital, community leadership, and community unity to business success in the coastal area.  Results also support the importance of community strength and its impact on business success after a natural disaster (Haynes et al., 2019).  This information was especially important to the Small Business Administration (SBA) because it was one of the few studies to explore the impact of SBA loans and loan guarantees on the survival and success of small businesses after a natural disaster. Results of these studies were presented at the annual meetings of the Agricultural and Applied Economics Association (AAEA) and American Council on Consumer Interests (ACCI).  

Sydnor et al. (2016) examined relationships between the impact of post-disaster damage, loss of lifelines, types of delays in reopening, and cascading damages on business continuity. Results demonstrated that damage may have a short term effect on operating status; it was associated with immediate demise but had much less effect on longer term recovery. Moreover, it appears there is more than one path to failure.

NC 1030 researchers from Purdue University organized an symposium at the AAEA Annual Meeting, Washington, DC, August 2018 titled “The Community-Business Tipping Point: Change, Resilience, and Progress.”  Presenters included NC1030 group members from Montana State and the University of Missouri.  Findings from these research topics could help small businesses owners prepare for continuity and keep sustainability from a natural disaster. These studies showed the relative importance of direct disaster assistance to family-owned small firms on their survival and success.

Wiatt and Marshall (2020) investigated what drove workaholism in small business owners. The effects of owner, family, and business characteristics on workaholism were studied. Men were more likely to be workaholics than women. Also, when men were primary caregivers for the children, his spouse was more likely to be a workaholic. Lower levels of functionality in the business was associated with an increased likelihood of a small business to have a workaholic owner. Also, workaholic owners did not have higher business income, as might be expected. Thus, workaholism does not “pay” in small businesses; these small businesses have incentive to find a healthy work-life balance.

Marshall and Wiatt (2019) designed the 2019 Small Business Values Survey (SBVS). The sample consisted of 511 business owners and topics included were business and owner demographics, copreneurial activity, technology and social media, socioemotional wealth, family and business functioning, adjustment strategies, work/family balance, disaster and crisis events, and exit strategies and financial information.  Multiple papers are currently underway using the data from this survey. 

The culture of collaboration within family businesses was explored by Wiatt and Marshall (2019, July). In this study, a culture of collaboration was a culmination of five main facets: 1) aligned/common goals, 2) family business functionality, 3) harmony, 4) creating an environment of openness to differences, and 5) balance between the family and the business. This culture of collaboration was linked to more financial stability in the family business and in turn, financial stability contributed to perceived business success. Along with fostering a culture of collaboration, other factors contributing to financial stability were profit over $50,000 annually, having a male owner, experience of the business owner, and copreneurial owners (spouses in business together). Also contributing to perceived business success was being a non-farm business, business tenure, and higher numbers of employees.

A literature review article was written for the Journal of Family and Economic Issues (JFEI) to summarize family business literature published in the JFEI from 2010 to 2019 and to consider future research opportunities.  The article, scheduled for publication in December 2020, will be valuable resource for aspiring researchers (Haynes et al., 2020). 

A fourth wave of data was collected in 2016 to add to the National Family Business Survey (NFBS).  The study was funded by a grant from NCRCRD led by Niehm, Muske, and Fitzgerald, NC 1030 members from Iowa and North Dakota.  This was the final round of a longitudinal study that followed a cohort of family businesses that continued to operate over a 20-year period. Findings revealed that a higher proportion of the businesses experienced a decrease in revenue due to recessionary disruption, and entrepreneurial responses to the recession were related to increased business revenue since 2010.  Additionally using this data, NC 1030 members examined how the level of owner involvement in the community (high involvement versus low involvement) and community involvement in local businesses (high involvement versus low involvement) influenced perceived business success and goal achievement in long-standing family businesses. Findings suggest that the more a family business is involved in the community, the greater perceived success the business has achieved. When seeking a profit, business owners also tend to be more involved in the community than owners not seeking a profit. A paper, “Owner and Community Involvement and Business Success in Small Family-Owned Business,” was presented at the 2020 Annual Meeting of the United States Association for Small Business and Entrepreneurship (USASBE) and published in Sustainability, an open-access journal (Jorgensen, et al., 2020).  Based on the findings of this study, it is clear that future research is needed to understand the role community involvement plays in business success. 

Additional accomplishments of the previous NC 1030 team include numerous Extension articles published with the aim of strengthening small businesses and encouraging practices that fortify businesses against potential disaster and disruption.  These articles focused on business planning, small business recovery, collaborative culture in family businesses, retirement in the family business, and views on fairness and financial performance in family businesses.

The NC 1030 team has published and disseminated research that documents the role of interactions and exchanges of resources between businesses, families and communities.  The most recent project took a comprehensive look at the entrepreneurial behavior or practices used by small businesses in times of change and economic, social, and technological disruption.  The barriers for entrepreneurs in rural areas has also been studied.  However, NC 1030’s past work did not cover the disruptions to economic and social systems due to climate change, social injustice and other systemic problems that require transformative and adaptive change necessary to increase resilience and sustainability practices.  The NC 1030 research team is interested in mitigating the disruptive impacts to SMEs, their owners, and the communities where they live and operate. 

Objectives

  1. Identify and measure the sources of major change and disruption and the structural barriers that impact the family/household, the business or the community.
  2. Identify and measure transformative responses to the positive and negative impacts of change and disruption on the family/household, the business, or the community.
  3. Determine and inform policy or practice related to the wellbeing of the family, the business, or the community.

Methods

In this era of unprecedented disruption to economic and social systems, a better understanding of adaptation and transformation strategies will be required. The consequences of global warming (e.g., shifting and more extreme climate patterns, greater instances of natural disasters, species extinctions, greater spread of infectious disease) increase the likelihood, number and strength of disruptions adversely affecting human well-being. Families, businesses, and communities must proactively respond to disruptive change in order to transform toward more resilient, regenerative and sustainable systems that may mitigate or lessen future disruptions. NC1030 members will address these issues as related to the established project objectives.

Several studies will be completed during the next 5 years investigating: sources and impacts of major disruption (e.g., climate change, natural disasters, global pandemic); structural barriers hindering change toward greater resiliency and sustainability; transformative responses by families, businesses and communities; and relevant practices and policies required to support adaptive change and transformation.

Five collaborative research themes are proposed by NC1030 members to be completed during this project period. We expect other research initiatives to emerge based upon these initial research efforts. Below is a brief description of these themes and initial research activities.

Theme 1: Rural Small Business Recovery and Resilience to Natural Hazards. An initial study under this theme will model the process of recovery and resilience of small rural businesses after a natural disaster, with a focus on women and minority owned enterprises. More specifically, the study will 1) define and assess the adaptive capacity of these businesses after a natural disaster, 2) associate adaptive capacity with post-disruption operating outcomes, and 3) assess adaptive capacity of women and minority owned small rural firms to natural disasters. These studies support NC 1030 Project Objectives 1, 2 and 3.

Theme 2: Sustainable and Resilient SMEs in a Regenerative Fiber and Food System.  A series of studies fall under this theme and support NC1030 Project Objectives 1, 2, and 3 by investigating how business practices must transform to a sustainable and resilient system that can support a regenerative fiber and food system that enhances well-being of families, communities and eco-systems. More specifically, several studies will: 1) identify current state of sustainability and resilience in SMEs operating in the consumer-based fiber and food supply chain (i.e., fiber, textile and clothing production, retailing and services; food production, retailing and services); 2) identify the primary structural barriers hindering SME transformation to greater sustainability and resilience;  3) isolate structural factors and characteristics of SMEs supporting transformation to more sustainable, resilient and regenerative businesses; 4) identify the most promising business models for enhancing family, community and eco-system well-being; and 5) develop a model explaining the relationships between SME characteristics, adaptive capability and alternative pathways for transformation to greater sustainability and resilience that can inform policy and practices.

Theme 3: Entrepreneurial and Innovative Response to Disruption and System Shocks by Family-Owned SMEs. Studies under this theme fall under Objectives 2 and 3, investigating factors that impact transformative responses to disruption and build resiliency that supports long term business success. Of particular interest is small retail, hospitality and service SMEs and rural Main Street businesses in regard to resiliency and adaptation strategies in the face of changing markets, shifting consumer behavior and an industry poised to transform as interest in innovative and alternative business models gain strength.

Theme 4: Contributions of Socioemotional Wealth, Rurality, Collaboration and Race on Resilience and Success of Family-Owned SMEs. The team also plan to study factors that influence socioemotional wellbeing of business owners and the relationship to SME resilience and long-term success. Of particular interest is the impact of race and place (i.e., rurality) and exploring how gender and a culture of collaboration supports socioemotional wellbeing. Activities under this theme supports Objectives 2 and 3.

Theme 5: Impact of Transgenerational Control and Transfer within Family Businesses on Resilience and Recovery. Studies will explore transgenerational control and transfer within small and family businesses, especially during periods of transformative change. Of interest is how these factors affect business resilience and recovery to major disruptions. The influence of additional small and family business characteristics, such as exit intentions and desired outcomes for owners, and the effect of collaborative culture on financial performance and perceived success, on business resilience and recovery are also of interest. Activities under this theme support Objectives 1 and 2.

Research Activities

This section briefly summarized the research methods used to address the project objectives and to implement the research studies above. Collaborative efforts will be used to coordinate data collection. Data will be pooled in data sets available for use by all members. A major strength of the research group is the subset of research teams that are formed to analyze data that has been gathered for the project and disseminate the results through various venues. The members will continue maximizing collaborative activities to garner greater efficiencies in our research efforts.

Mixed methods approach will be employed to investigate the complex nature of the problem. This approach allows our team to collect and analyze data through qualitative and quantitative research strategies, whichever is appropriate based upon the research questions being investigated. An added feature of mixed methods is that it supports triangulation of data (Creswell, 2009) and enhances theory development and model building. Qualitative strategies will include individual and focus group interviews to extract common themes and build grounded theory. Quantitative research strategies include collecting primary data from appropriate populations using survey instruments to measure key variables. Secondary data will also be important sources of information to supplement the primary data collected. Relevant secondary data about SMEs, household and communities will be extracted from a variety of restricted and public sources such as: U.S. Census Bureau, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics, Family Business Succession Survey, 2019 Small Business Values Survey, 2013 Small Business Survival and Demise after a Natural Disaster, and American Community Survey. Analytical and statistical techniques utilized for each component of the research project will vary based upon the nature of the research questions and the hypothesized relationships being tested. 

The team will work on data analysis and publications using NC1030’s declaration system. The declaration system allows a member of the team to suggest (or declare) a theme for an article which includes the dependent variable of interest, the independent variables, and the econometric model to be used. The declaration is then sent to the entire NC1030 team to ask for input. The declaration system does two things, first it allows for the team to monitor what is happening with the data; and, second, it encourages collaboration among team members.

The team works very collaboratively and is divided into subgroups that focus on the five research themes listed above. In most cases, the team members work on more than one theme area and all will be involved in data analyses and dissemination of results.

Measurement of Progress and Results

Outputs

  • Development of a model of the natural disaster recovery process and adaptive capacity of small rural businesses.
  • Creation of a database of SMEs operating in the consumer-based fiber and food supply chains, including primary data collected from qualitative and quantitative studies as well as curated secondary data to be used to explore transformative responses to major disruptions and identification of best practices.
  • Identification of rural Main Street retail, hospitality and service SMEs adaptation strategies to an industry undergoing transformation.
  • Detection of key variables influencing sustainability and resilience within families, businesses and communities as they respond to major disruptions.

Outcomes or Projected Impacts

  • Results will lead to better understanding of key vulnerabilities and adjustments that small businesses in vulnerable communities make to fully recover from natural disasters.
  • Provides a deeper understanding of what factor affects transgenerational transfer and control within small and family businesses will allow advisors, businesses, and educators to better guide clients and his or her own operation. Results will be disseminated through extension publications and journal articles.
  • Identifies best practices for families, businesses, and communities to develop greater resilience and transforming to more sustainable supply chains and social systems.
  • Research efforts support necessary transformative responses to ensure owners of SMEs can continue to operate, creating livelihood opportunities for themselves and others in the community as well as contribute to the overall economic health of these rural and small communities.
  • Results provide insight regarding the effects of gender and ethnicity on collaboration and performance for family-owning firms.

Milestones

(2021):PHASE 1: develop, test and refine instruments to measure key variables (e.g., sources of disruption, structural barriers, small business adaptive capacity, and transgenerational control and transfer); conduct focus group interviews; construct surveys; collect data from SMEs; and establish database structure.

(2023):PHASE 2: develop and estimate statistical models; build datasets to add to database; identify adaptive and transformative responses, best practices and most promising alternative business models supporting sustainability and resilience in SMEs; submit and present conference papers; and develop and submit manuscripts to peer reviewed journals in relevant but diverse disciplines (e.g., agricultural economics, rural development, business management, hospitality, and retailing).

(2024):PHASE 3: disseminate research findings and best practices to non-academics through newsletters, social media and workshops; consider policy implications of key research findings and identify advocacy opportunities.

Projected Participation

View Appendix E: Participation

Outreach Plan

The project will have multiple outreach outlets that reflect the diversity of the NC 1030 membership. Research findings will be shared through scholarly publications in research journals that span multiple disciplines, and will be presented at national and international conferences. Findings will be also published in extension, community development and policy journals, as well as outlets that reach community and public sector stakeholders. Results will offer information that can be useful to policy makers, businesses, and educators. Beyond academic audiences, materials will be posted in appropriate Extension communities of practice such as Entrepreneurs and their Communities. Lessons from research on non-normative impacts has implications useful to agencies, for example the Federal Emergency Management Agency and the Small Business Administration. Lessons learned will be shared with these agencies and local communities through such means as informational websites, news releases, social media platforms, Extension publications, and publications of professional organizations such as Choices published by the Agricultural and Applied Economics Association, and Webinars, such as C-FARE, NCERA, and a webinar for the NCRCRD to share findings from grant funding.

NC 1030 research will be presented to conference venues such as the U.S. Association of Small Business and Entrepreneurship (USASBE), Applied and Agricultural Economics Association (AAEA), American Collegiate Retailing Association (ACRA), American Council of Consumer Interests (ACCI), International Textile and Apparel Association (ITAA), the Community Development Society (CDS), and the Cambio de Colores Annual Conference of Latinos in the Midwest. Published work will be disseminated through academic journals such as the Journal of Developmental Entrepreneurship, Journal of Small Business Management, Journal of Family and Economic Issues, Natural Hazards, Journal of Extension, Journal of Small Business Strategy, Sustainability, and the Journal of Fashion Practice.

Organization/Governance

Executive Committee: The technical committee retains all powers except those specifically delegated to a subcommittee. The officers of the technical committee shall constitute the executive committee. There shall be a chair, a secretary, and a member at-large, one of which is elected each year. The executive committee shall respond in writing to any inquiry from a member of the technical committee.

Duties/Term of Office: The chair sends a copy of the annual report to the technical committee members, and informs the administrative advisors secretary of changes to the NC 1030 list serve. The chair, elected in the odd-numbered years, serves for two years beginning at the end of the annual meeting in which elected. The secretary, elected in the even-numbered years, serves for two years beginning at the end of the annual meeting in which elected. The member-at-large serves for one year beginning at the end of the annual meeting in which elected. The at- large member works with the executive committee on matters brought to the attention of the chair, which require a vote. In the event that co-chairs are elected, there will be no election of a member-at-large.

Other Appointees and Subcommittees: There shall be a member appointed by the chair who will update the mailing list. There shall be a member appointed by the chair who will serve as editor of a public web site created for the NC 1030 project. There shall be a member appointed by the chair who will serve as manager of the interview schedules. A policy subcommittee will consist of a chair and at least two additional members who shall be appointed by the chair.

The subcommittee will serve for the duration of the NC 1030 project. A chair, selected by the subcommittee, will remind the members of the technical committee, of the policies on a regular basis.

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Attachments

Land Grant Participating States/Institutions

CA, HI, IN, KS, MN, MO, MT, ND, UT, WI

Non Land Grant Participating States/Institutions

Purdue University
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