Family business during the COVID-19 pandemic in Asia: Role of government financial aid and coping strategies

Abstract

The COVID-19 pandemic has heavily affected economic activities. In emerging Asia, where small family businesses play central roles in their economies, previous studies found that the sector was particularly hard hit by the pandemic. However, little is known about how households have mitigated the negative shocks on their family business during the pandemic. Using datasets from representative household surveys in seventeen Asian countries from the Association of Southeast Asian Nations (ASEAN) and the Central Asia Regional Economic Cooperation (CAREC) regions, this study investigates the role of business coping strategies and government financial aid in mitigating the adverse impacts of the pandemic on family business conditions in the short run. We find that (i) adoption of coping strategy is associated with a lower probability of both a decline in family business income and family business closure; and (ii) government financial aid is associated with a lower probability of a decline in family business income and a higher probability of adopting coping strategies. This study is one of the first to provide empirical evidence on mitigation mechanisms of family business in emerging Asia. This is important to understand what policies will enable the family business sector to perform better during the future pandemics and other economic crises.