Even though family businesses are often viewed as not the most agile, when a crisis of this magnitude hits, they are able to quickly bring to bear skills developed over generations to ensure resilience, capitalizing on the trust patiently accumulated with various stakeholders and continuing to live their deeply-held sustainability values.
For example, following a performance decrease family-owned firms are less likely to downsize the workforce.1 In the past weeks, we have seen number of multigenerational and global family businesses convert their manufacturing facilities to produce sanitizers and disinfectant solutions with the intention to donate them to the health authorities.234 One such example is Firmenich, the world’s largest privately-owned perfume and taste company.
This article, based on the Firmenich story, illustrates that at the heart of many family businesses’ successful pivot are values-based sustainability-driven business models and governance mechanisms that are resilient to even the most dramatic shocks.
Firmenich, a Geneva-based family business, is the world’s largest privately held manufacturer of fragrances and flavorings industry for consumer goods. Its client list includes the world’s largest food and beverage, beauty, and household care and fabric companies. About 4 billion people worldwide use a product containing a fragrance, flavor, or ingredient by Firmenich, ranging from yogurt or cereals in the morning to shampoo or fine fragrance at night.
Established in 1895, Firmenich is currently entirely owned by family shareholders from the third to the fifth generation. The company is present in more than100 markets worldwide and operates over 80 facilities across the globe.
In response to the COVID-19 virus, Firmenich reacted swiftly and adapted the production of its Geneva manufacturing sites to donate 20 tons of disinfectant solution to the Geneva University Hospital and medical and emergency services.5 To meet increasing global demand, the Group increased its production capacity to 100 tons for hospitals, as well as medical and emergency services across the USA and Switzerland.
What enabled the quick reaction of Firmenich was, on the one hand, its recognition of the societal value reflected in its purpose and fundamentals as well as an inclusive capitalism business model, and, on the other hand, a remarkably resilient-to-shocks governance mechanisms model of concentrated family ownership, independence, financial prudence, long-term thinking, and skilful balancing the business and owners’ needs.
Read the full Family Businesses in the Times of Crisis and Global Recession: A story of resilience and sustainability article at Family Firm Institute.
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