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.