New research from Radboud University shows that municipalities with close-knit social structures and a stable resident population experienced significantly fewer business closures during the crisis. The researchers analysed all 379 Dutch municipalities and discovered large differences in the number of organisations that closed down in the first year of the pandemic. The economic consequences varied greatly from region to region, even though the national lockdown measures were the same for everyone. According to Koornneef and Vermeulen, social cohesion played the decisive role.
Social cohesion is crucial for economic resilience during a crisis
What do you do as a community when faced with a setback or crisis, such as Covid-19? Do you continue to function economically as usual? Business experts Stephanie Koornneef and Patrick Vermeulen, in collaboration with Tilburg University and Rotterdam School of Management, investigated the impact of social cohesion on the economic resilience of communities. What did they find? Communities with strong social ties were significantly better able to absorb the economic shock of the coronavirus pandemic.
Kinship and residential stability
Koornneef and Vermeulen's research focuses on two dimensions of social cohesion:
- Kinship: a shared identity, mutual support and a sense of responsibility among residents;
- Residential stability: long-term residence in the same community, resulting in sustainable and reliable social networks.
A community that scored highly on these dimensions proved to be more capable of organising help, coordinating support and carrying out economic activities.
Crucial role of family businesses
An important insight from the research is the role of family businesses. Municipalities with a high proportion of family businesses proved to be more economically resilient in a crisis. Thanks to their strong local roots and long-term orientation, family businesses were more willing to commit to local employment and maintain facilities in the short term. The researchers also noticed that residents were willing to support local entrepreneurs. Koornneef: ‘Our research shows the power of connected communities in times of need: residents and businesses support each other, sometimes with very creative and lucrative actions, to maintain the community, even if this may be at the expense of short-term profitability.’ Vermeulen adds: ‘Family businesses are not just silent witnesses to a crisis — they are the shock absorbers of the local economy. In communities with more family businesses, the number of bankruptcies fell significantly more than in communities with fewer family businesses. They drew on family capital, maintained employment relationships, and acted as a moral compass for the community.’
Literature reference
https://journals.sagepub.com/doi/abs/10.1177/01708406261432829?forwardService=showFullText&tokenAccess=IZVDDJKBAKC9SYMSKT5T&tokenDomain=eprints
Contact information
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- Organizational unit
- Nijmegen School of Management, Institute for Management Research, Business Administration
- About person
- Dr S.C.J. Koornneef (Stephanie) , Prof. P.A.M. Vermeulen (Patrick)