Angela Pike-Bowles *
Department of Applied Management, Administration and Ethical Leadership, University of Fort Hare, South Africa.
Juliet Townes
Department of Applied Management, Administration and Ethical Leadership, University of Fort Hare, South Africa.
In this post, we present a brief overview of our recently published book chapter titled “A Qualitative Exploration of Risk Management Strategies in Family Businesses”
Family businesses face various business risks that affect the continuance of operations if not managed efficiently. Such business risks entail changes in government legislation, economic uncertainty, and the family dynamic. Although family business research has recently proliferated, there is insufficient reference to risk management, particularly within the South African context. The purpose of this study was to explore risk management within family businesses, specifically using a qualitative lens. This study adopted an exploratory research design as it sought to gain insight into a topic, identify practical solutions, and generate innovative ideas. A total of 13 family-owned businesses within the Eastern Cape locale were interviewed using a semi-structured interview guide. The snowball sampling technique was used to select participants for this study, with one family business owner or manager per family business serving as the sample unit. Thematic analysis was then used to analyse the data, during which codes and themes were developed. The research findings concluded that the majority of the family businesses were experiencing a range of risks, ranging from operational, financial and security risks to succession and continuity risks. The results further highlighted that risk aversion and intergenerational risk issues were prevalent in these family businesses. These findings align with agency theory and behavioural family business research, which highlight the complex relationship between business owners (principals) and managers (agents). Formal risk management protocols were common, as well as the development of individual risk management plans focusing on each risk the business may experience. Whilst emotional reactions were often prevalent, most family businesses were engaging in strategic innovation and flexibility to manage business risks. Business continuity, knowledge transfer and ongoing adjustment were common matters discussed when considering risk management in these family businesses. The study’s findings have implications and recommendations for family business owners, managers, and practitioners regarding the implementation of a universal risk management framework.