Concept Paper-NC1030

Resilience
Sharon M. Danes & Jinhee Lee, March 2007
The conceptual definition of resilience in this concept paper is outlined from three perspectives:
isaster literat!re re"errin# to s$all %!sinesses, S&' (heor), an "a$il) literat!re.
Disaster Literat!re Re"errin# to S$all '!sinesses
Federal disaster aid was instituted to facilitate recovery. However, research has found that
disaster assistance helps individuals recover, but not businesses (Alesch et al., 200!. "ittle is
#nown about economic losses e$perienced by small businesses after a natural disaster or the
lon%&term impact of losses (Alesch et al., 200' (ose, 200)!. Althou%h researchers e$pected to
find that disaster assistance aided business recovery, *ebb, Tierney, + ,ahlhamer, (2000! found
no si%nificant effect, and ,ahlhamer and Tierney (--.! found post&disaster aid was ne%atively
related to disaster recovery. Two e$planations were offered: (a! the worst dama%ed businesses
received assistance, and (b! the %reatest proportion of business disaster assistance was loans that
increased debt load and eventually led to business closure.
(ecent business interruption loss research introduced the concept of resilience capacity defined
as resources an entity needs in order to underta#e new ad/ustment&related tas#s in relation to
their on&%oin% responsibilities (0i%%, --1!. (ose (200)! distin%uished between capacity (stoc#!
and the use of the capacity (flow!. This study utili2es a lon%itudinal, representative sample of
family firms to investi%ate the federal disaster assistance effect on small businesses controllin%
for their resilience capacity.
S&' (heor) *+se in NS& proposal,
3n contrast to other business Theorys, the 4F5 Theory posits that at the family&business interface,
each system responds to disruptions in re%ular patterns by e$chan%in% resources across systems,
creatin% a capacity for resilience in the face of disruptions (6lson et al., (2007!. A capacity for
resilience a%ainst disruptions can be built in both the family and business systems. The
resilience capacity created in the family system is permeable and is transmitted to the business
system. As portrayed in the 4F5 Theory, resilience is the ability of the family business to ad/ust
resource and interpersonal processes to internal and e$ternal disruptions (4tafford et al., ---!.
The capacity for resilience is a reservoir of individual and family resources that cushion the
family business a%ainst disruptions and is characteri2ed by individual and collective creativity
used to solve problems and %et wor# done (8onner, --2' ,anes, ---, 2009!. 3f families have
built a stored capacity for resilience, when it encounters a disaster or acute disruption, the store
of trust and creativity in problem solvin% can be more easily and :uic#ly tapped and adapted to
the new situation. Three processes contribute to resilience capacity in family businesses: family
functionality, co%nitive predisposition for schedulin% con%ruity, and pattern of ad/ustin% to
disruptions. The stren%th of these processes creates a set of mechanisms that will tend to
automatically #ic# in when encounterin% natural disasters.

Family functionality represents the stability of the family and is measured by family A;<A(
which has five components: adaptation, partnership, %rowth, affection, and resolve (4mil#stein,
-=.' 4mil#stein, Ashworth, + >ontano, -.2!. ?ach component has a uni:ue function, yet is
related to the whole (,anes + >or%an, 200)!. 3t connotes a sense of trust, creativity, and
openness that brin%s a family@s interactions to a hi%her level of responsiveness (,anes +
>or%an, 200)' 4tewart + ,anes, 200!. 3t was developed to assess the capacity of a family to
respond to a health emer%ency and help ta#e care of a family member. 3t has been found to
distin%uish between families that hold to%ether and families that fall apart (4awin, and Harri%an,
--1!. The co%nitive predisposition for schedulin% con%ruity represents #nowled%e family
members have about decision ma#in% and activity coordination (Avery + 4tafford, --'
4tafford + Avery, --7!. 3t measures the e$tent to which different schedules pursued by a
family, both individually and collectively, fit to%ether harmoniously, appropriately, and a%reeably
into %roup #nowled%e and action (4tafford and Avery, --7!. "ac# of con%ruity undermines
efficiency and reduces cooperation and decreases resilience.
3ntermin%lin% of family and firm finances is another ad/ustment strate%y buildin% resilience
capacity. 4mall firm finance research has basically missed family&firm intermin%lin% of finances
in business&ownin% families. That literature has concentrated on profit ma$imi2ation and ris#
tolerance preference Theorys, the financial and re%ulatory structure of corporate financial mar&
#ets, or used samples from the upper bounds of what constitutes a AsmallA firm (Haynes + Avery,
--=!. Haynes et al. (---! found that two&thirds of family firms intermin%led household and
firm finances, indicatin% that finances are ine$tricably intertwined. *hen investi%atin% family&
to&firm intermin%lin%, sole proprietorships were more li#ely to use family resources in the firm
than other types of firms, as were those who were youn%er owners, and owners without children.
3ntermin%lin% of money also made it virtually impossible to predict the impact of a loan on firm
success. 3ntermin%lin% may affect family firm ability to :ualify for assistance.
Co$parin# Resilience Capacit) De"initions "ro$ S&' (heor) an -a.ar Research
3n the 4F5 Theory, resilience capacity is defined as a reservoir of individual and family
resources that cushion the family business a%ainst disruptions characteri2ed by individual and
collective creativity used to solve problems and %et wor# done (8onner, --2' ,anes, ---,
2009!. 3t is measured by family functionality, co%nitive predisposition for schedulin% con%ruity,
and ad/ustin% to disruption pattern. (esilience is defined in ha2ard loss literature as the ability to
cushion or reduce potential losses (8utter, 5oruff, + 4hirley, 2007' Tierney, --=!. (ose and
"im (2002! operationally defined firm resiliency as the difference between actual and potential
loss and he measured it by the use of inventories and bac# up e:uipment, substitution of non&
disrupted inputs, process chan%e, conservation, ma#in% up lost production at a later date,
substitution of imports for locally produced %oods, and substitution of e$ports for local demand.
There is a conceptual difference between the store of resilience capacity and ta#in% actions that
draw on capacity to miti%ate loss from a disaster. (ose and "im (2002! defined resilience as an
outcome state rather than an input of capacity. They then proceeded to measure resilience by
actions ta#en to influence the outcome state, as a set of processes. 3n the 4F5 Theory, resilience
capacity is a resource input (a stoc# of a type of human capital!. (esilience is a chan%e in
outcome state that can only be measured by three points in time. Actions ta#en to influence the
2
outcome, ad/ustments to disruptions, may be either resilient or nonresilient, dependin% on their
effect on the outcome state. 5ecause the proposed pro/ect will have three points in time&before
disaster, the disaster, and after the disaster&the wor# of the pro/ect will be able to distin%uish
between resilience capacity, resilience with nonad/ustments to the disaster, and resilience with
ad/ustments to the disaster. (esilience is short&run survival. The pro/ect wor# can distin%uish
between resilience, so defined, and lon%&run survival and success, more a#in to sustainability.
&a$il) Literat!re
There is much literature on resilience but most of it is on resilience in individuals versus families
(;atterson, 2000b' *alsh, 2007!. Further' there is not conceptual clarity in the family resilience
literature about how the term is defined and applied. 3t is defined and applied very differently by
clinical practitioners and family researchers (;atterson, 2002a!. ;atterson (2002a!, in an attempt
to brin% conceptual clarity, emphasi2ed the importance of ma#in% conceptual and operational
distinctions between family system outcomes and family protective processes. 3n so doin%,
;atterson (2002a! distin%uished between "a$il) resilienc) as capacity and "a$il) resilience as a
process. This distinction is similar to the stoc# versus flow of resilience that (ose (200)!
identified in the disaster literature.
&a$il) resilienc) is the capacity, characteristics, properties, and :ualities of a family system to
successfully mana%e their life circumstances in the face of crisis situations (;atterson, 2002b'
>c8ubbin + >c8ubbin, -..' "avee, >c8ubbin, + 6lsen, -.= B,eletedC!. &a$il)
resilience, on the other hand, is B,eletedC on%oin% and dynamic processes by which families are
able to adapt and function competently followin% e$posure to si%nificant adversity or crisis, both
in the present and over lon% periods of time rather than bein% static (B,eletedC Hawley +
,ehaan, --9' "uthar, 8icchetti, + 5ec#er, 2000' 8on%er + 8on%er, 2002' ;atterson, 2002a,
2002b! B>oved + >er%ed into the ne$t para%raph + >odifiedC .
>asten and 8oatsworth (--.! clarified three conditions necessary for considerin% resilience in
individuals. Adaptin% those three conditions to family as the unit of analysis, ;atterson (2002b!
stipulated that (a! family&level outcomes need to be conceptuali2ed so it is possible to assess the
de%ree to which a family is competent in accomplishin% the outcome, (b! there must be some ris#
associated with the e$pectation that a family will not be successful, and (c! there must be a need
to understand what protective mechanisms prevent poor e$pected outcomes. ;atterson(2002b!
emphasi2ed that si%nificant ris#, protective factors, and outcomes each must be distinctly defined
to decide if a family has en%a%ed in a process of resilience. A family level outcome (whether a
family is resilient! is the de%ree to which they are able to successfully fulfill their function so that
individual family members and other social systems benefit (;atterson, 2002b!. Family ris#s or
disruptions could be classified, based on the nature and e$tent of the ris# e$posure, in three
different ways: discrete events of chan%e, daily hassles, and on&%oin% family strains (insidious
unresolved tensions! (;atterson, 2002a!. ;atterson(2002b! also focused on the relational
processes within families as the primary protective mechanisms: family cohesiveness, fle$ibility,
and the :uality of affective and instrumental communication patterns.
8ommunity and cultural conte$ts in which a family resides is very important to ta#e into account
when doin% research of resilience in families (5oss, 200: Hawley + ,ehaan, --9' *alsh,
7
2007!. ;atterson (--7! and ;atterson and <arwic# (--)! also indicated that family meanin%s
mi%ht be an important construct in understandin% how the resilience process unfolds because
family meanin%s shape the nature and e$tent of ris#, as well as the protective capacity of a
family. They describe three levels of family meanin%s that mi%ht be important: (a! families@
definitions of their demands and capabilities, (b! how the family sees themselves internally as a
unit, and (c! their world view (how they see their family in relationship to systems outside of
their family.
*ithin the family resilience literature is a construct relevant to family world view identified as a
sense of coherence. The sense of coherence refers to the e$tent to which one sees one@s world as
comprehensible, mana%eable, and meanin%ful (Antonovs#y + 4ourani, -..!. ?$plorin%
whether sense of coherence mi%ht be considered a family&level construct, >c8ubbin, Thompson,
Thompson, ?lver, + >c8ubbin. (--)! defined family coherence as a shared world view
e$pressin% the family@s feelin%s of confidence. This construct B,eletedC contributes to resilience
capacity in much the same way as the schedulin% con%ruity construct discussed earlier in that it
is an endurin% and dynamic feelin% of confidence that one@s internal and e$ternal environments
are predictable (Antonovs#y + 4a%y, 200' Antonovs#y + 4ourani, -..!. These authors
indicate that the sense of coherence has three characteristics: consistency, underload&overload
balance, and participation in socially valued decision ma#in%. A sense of coherence is a
mechanism to ad/ust to disruptions because it is characteri2ed by a tendency to see life as
predictable and mana%eable.
Ta#in% a life&cycle perspective on resiliency, well&functionin% families have an evolutionary
sense of time and becomin% with the balance shiftin% between disruptive events that hei%hten
vulnerability and protective processes that enhance resilience (Hawley + ,ehaan, --9' *alsh,
2007!. 3n re%ards to re&establishin% balance after disruptions, *alsh (2007! stipulated that a
firm, yet fle$ibly authoritative leadership is most effective for the well&bein% and continued
healthy functionin% of families.
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=