Family and non-family business resilience regarding Industry 4.0

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Family and non-family business resilience regarding Industry 4.0

SUBMITTED IN PARTIAL FULLFILLMENT FOR THE DEGREE OF MASTER

OF SCIENCE

Maximilian Kritsch

12417491

M

ASTER

I

NFORMATION

S

TUDIES

Information Systems

F

ACULTY OF

S

CIENCE

U

NIVERSITY OF

A

MSTERDAM

04.07.2019

1st Supervisor 2nd Supervisor Mr. dhr. drs. Toon Abcouwer Ms. Emőke Takács

Faculty of Natural Sciences, Mathematics and Computer Science Faculty of Natural Sciences, Mathematics and Computer Science University of Amsterdam University of Amsterdam

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Family and non-family business resilience regarding

Industry 4.0

Master Thesis

Maximilian Kritsch 12417491

University of Amsterdam

Amsterdam, !e Netherlands

ABSTRACT

Resilience in the area of Industry 4.0 plays a crucial role for family and non-family businesses in the 21st century. Due to the advanced digital transformation of the production processes, quality and eﬃciency within and outside of the company processes increase. Additionally, the networking of machines raises the transparency of various processes. !e use of information and communication technologies digitizes traditional production processes. !us, machines can communicate among each other and tune their production speed. !us, companies have the opportunity to follow the progress of the production process by implementing Industry 4.0 technology and determine the current status of the respective product. !e digitization of production processes is a long-term and continuous project, which has to be planned meticulously as its implementation requires many resources. !ere is no doubt that Industry 4.0 will change the corporate structures of family and non-family businesses. As a result, they need excellent resilience to master this digital revolution.

KEYWORDS

family and non-family business, resilience, technical innovation, digital economy, Industry 4.0

1 INTRODUCTION

An increasingly digitizing world is characterised by new technological achievements. Therefore, companies have to adjust more and more quickly to the different conditions in the economic market in order to survive in the long term.

Resilience and technological innovation are among the critical components of successful business development. Furthermore, family businesses have unique characteristics that distinguish them from non-family businesses. For example, they tend to focus on long-term goals, containing the risk within a certain framework in order to shield themselves from unnecessary danger.[1] This raises the question how family businesses manage to succeed in the competition with non-family businesses and position themselves as market leaders in innovative technological areas. Furthermore, most family businesses are in uncertain terrain and can defend themselves through their smart innovation management. One of the most critical areas where technological

innovation takes place is commerce, construction, electronics & instrumentation, nutrition, and health. The digital revolution is happing with Industry 4.0, which will set new standards in various industries. Accordingly, innovative machines are networked with one another and can thus ensure an intelligent production and monitoring of products.[2] Since this area of business is not fully explored, the following research question is pertinent: " What are the differences in resilience between family and non-family business regarding Industry 4.0?" The focus here is on the comparison between family businesses and non-family businesses. Accordingly, it is examined why the former have a better digital innovation power in the area of Industry 4.0. Linked to that, it will be explained why this digital transformation leads to more resilience in family businesses.

To accomplish this, the concept of resilience is first explained and illustrated. In a next step, Industry 4.0 will be presented and illuminated in its different facets. Subsequently, the method of the empirical study is explained, and the family and non-family businesses are compared on their innovative strength in the field of Industry 4.0 which should lead to more resilience. Then the results will be shown and interpreted to answer the research question presented above. Finally, the most important results will be summarized, and further research areas will be discussed.

2 RELATED WORK

This section of the paper will give an insight into the differences between family and non-family businesses. In the further course, it will be discussed which role Industry 4.0 plays for companies and which potential this new technological revolution offers. Finally, the various areas of resilience in an individual company will be explained. These three core topics form the foundation which is used in the next section to formulate hypotheses for future research.

2.1 Family and non-family business

Family businesses are significant players in the economy as they make up the majority of existing businesses. Besides, they address entrepreneurial risks that offer them new economic benefits. Furthermore, they take a lower risk compared to non-family businesses. Moreover, they are usually categorized as conservative and rigid in terms of change and innovation. Also,

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the existing family assets may be decisive in that no entrepreneurial risks and investments come into question. Therefore, they should use the capital reinvestment to build a barrier, which protects them against market withdrawal.[3]

2.1.1 Definition of family and non-family business

Family and non-family businesses play an essential role in the European economy. Every company contributes to the prosperity of society, and it does not matter if they are listed or not. To date, there is no standardized definition of family and non-family businesses. One of the most common ways to define a family business is to categorize according to the company shares held by the family. The European Commission has four definitions for determining whether a company is a family and non-family business.[4], [5]

"1) The majority of decision-making rights are in the possession of the natural person(s) who established the firm, or in the possession of the natural person(s) who has / have acquired the share capital of the firm, or in the possession of their spouses, parents, children, or children's direct heirs.

2) The majority of decision-making rights are indirect or direct. 3) At least one representative of the family or kin is formally involved in the governance of the firm.

4) Listed companies meet the definition of family enterprise if the person who established or acquired the firm (share capital) or their descendants possess 25 per cent of the decision-making rights mandated by their share capital. "[6]

According to this, a company is a family business as soon as the family members of a company own more than 50 percent of the company's shares and are directly or indirectly involved in the company business. For equity corporations, this threshold is 25 percent, which is lower than for companies not listed on the stock exchange. According to this definition, all companies can be divided into family and non-family businesses. In the course of the work, this definition of family businesses is used.[6]

2.1.2 Innovation power of family and non-family business

The innovative power of companies is one of the most important strengths for a long-term existence in the market. There are crucial differences in the power of innovation in family and non-family businesses. Most non-family businesses are described as conservative, path-dependent and non-adaptive, but family businesses tend to be more innovative than non-family businesses. Often, they are located in product and service niches where they show a high degree of innovation and thus persist in the market in the long term. Most of the non-family-owned companies often have less innovation and therefore rely on their existing strengths in the marketplace.[7], [8]

However, there are just as many risks associated with innovation as it usually takes much investment to acquire knowledge about markets and technologies. Due to the high cost of innovation, it is often challenging to detect the success of the investments, as they usually bring an uncertain outcome. Furthermore, the success of innovation in family businesses is due to their long-term

orientation. As a result, they do not seek to generate quick and short-term capital reflux. Therefore, they can fully exploit the potential of their innovation power in the long term. It follows that the success of investing in innovation will only take a long time to materialize. Furthermore, family businesses are active in their innovative power because they calculate the costs of research and development very precisely. Therefore, non-relevant investments are avoided to support vital research projects with sufficient capital. Furthermore, there is little bureaucracy in the family business which limits the innovation power. This significant advantage enables fast and efficient action of the family business compared to the non-family business.[9], [10] Consequently, this is because non-family businesses are usually very sluggish in their decision-making. Thus, investments in different areas of innovation are made very later. Finally, family businesses are stronger in innovative processes than non-family business.[11]

2.1.3 Risk taking in family and non-family business

Family and non-family businesses have different views on the approach to risk-taking. This topic is separated into two central areas. First, financial resources are a crucial issue, as they are the solid foundation for future investments. In order for companies to be prepared for the 4.0 Industrial Revolution, they need to provide some financial resources. Due to the high investment costs in the area of Industry 4.0, this creates considerable financial risks. As a result, family and non-family businesses need to assess carefully how much venture capital they want to use in this area. A significant advantage of investing heavily in new technologies is that they offer the opportunity to gain more market share and profits. Thus, the question arises whether family or non-family businesses usually take higher risks in this area. Large corporations that are not in the hands of one or more families tend to have a strong sluggishness when it comes to decisions. As a result, they are usually more risk averse than those run by families. Due to the flat hierarchy, decisions are made very quickly, are mostly very forward-looking and also pose a considerable risk.[12]–[14]

The second area that entails many risks relates to the family situation and the structures within a company. These are key to the future of the company, as they are one of the essential building blocks in the foundations of a family business. Large corporations that are not family-run have strict and hierarchical structures which are precisely defined. In a family business, the positions of family members are not always clearly defined which can lead to tensions in the company. The structured role allocation of family members in the company can contribute to the positive image of the company. By involving several family members, key positions within the family business can be assigned. Consequently, active family involvement can significantly reduce the failure of a family business.[15]–[17]

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2.2 Industry 4.0

This chapter deals with the fourth industrial revolution of the so-called Industry 4.0. Therefore, the historical development of the four technological revolutions will be described. Afterward, the different dimensions of Industry 4.0 will be discussed and explained.

2.2.1 Definition

In a technical society that is becoming more digitalized every day, it is increasingly important to work more efficiently, smarter, and faster. In the history of humanity, industrial revolutions have repeatedly made our work processes simpler. In the 18th century, the first industrial revolution occurred based on the invention of the steam engine.[18], [19] For the first time it became possible to facilitate heavy-duty work processes. Therefore, the capacities in the factories could be multiplied.[20] The second industrial revolution was triggered in 1913 by none other than Henry Ford.[18], [21], who came up with the idea of introducing the principle of assembly line work in his car production. Due to this technological development, each of the workers only had to master a few specific steps in the car industry. By optimizing all processes in the factory, the capacity of the production could be drastically increased. The improved work processes also reduced the cost of production, making a car accessible to ordinary people for the first time.[22], [23]

The third industrial revolution occurred in the early seventies of the last century when the first programmable controller was invented. Consequently, this enabled the fully automatic processing of production processes in the factories. Due to this development, only specialists for production optimization were asked for the first time to program and implement the corresponding controls. [21]

Subsequently, this was followed by the fourth industrial revolution (Industry 4.0), which enabled the linking of machines through digital networks.[21], [24] As a result, this allows the machines to communicate with each other and determine the most efficient production plan possible. This connection leads to a resource-saving and efficient use of raw materials. Due to the permanent connection between the machines, it is possible to obtain information about the production process. This optimization process can reduce labor costs to a minimum. To keep track of the four industrial revolutions, they are depicted in figure 1 in a timeline.[25], [26]

Consequently, this raises the question of how far families and non -family businesses will implement Industry 4.0 in their production process. One of the biggest hurdles here are the enormous financial resources that have to be spent to guarantee a flawless implementation.[27]

2.2.2 Dimension

In the last few centuries, there have been three industrial revolutions that have improved our manufacturing processes. Meanwhile, we have reached the fourth, which gives us new doors for faster automated processes. With this imminent change in production systems and services, it is essential to understand the

relevant dimensions that are affected by such a revolution. Looking at the concept of the socio-technical system, it is possible to define the essential dimensions within the immediate change.[29]–[31] The first relevant dimension is the interaction between man and machine and the associated requirements to enable such communication between two such different elements. Through this new relationship, it is equally important to define the task structures as well as the activities of those persons who are directly related to the system. Also, there is the organization of work for the structuring of the individual tasks and activities, which are in such cooperation between man and machine. The communication between the system and the respective participants is the most critical part. The cornerstone of the new fourth industrial revolution is the network. For a perfect network, all the machines are connected. This optimal and intelligent connection results in efficient communication between the existing interfaces. All movements and vibrations are registered in such a network and transformed into relevant information. This creates a new form of communication that allows us to share adequate information. The restructuring of activities and tasks in logistics will be rearranged to respond to challenges quickly and accurately.[28], [32], [33]

In addition to the benefits of Industry 4.0, there is an increased demand for skilled employees since it is not enough to connect the production machines with each other. They must be maintained and serviced by humans. It is very likely that there will be a shortage of skilled workers in the area in the long term. Accordingly, family and non-family businesses need to prepare for an imminent change in this area.[34]

Figure 1: The four industrial revolutions[28]

2.3 Resilience

This chapter discusses the three different factors of resilience which can be categorized into engineering, social, and ecological parts. Therefore, resilience provides the best foundation to answer the question of uncertainty. Consequently, a balance must be found between the measures and investments to support the ability to change in difficult situations. [35]

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2.3.1 Adaptive cycle

Resilience means that companies do not disappear from the market on unforeseen challenges and problems. Companies need to have an excellent foundation to prepare for changes and adapt to new challenges. The adaptive cycle according to Holling, as presented in figure 2, shows how the life cycle of an ecosystem behaves in different areas.[36] The adaptive cycle can be split into two essential dimensions, which are characterized by a forward loop and a backward loop. These two dimensions can be divided into the following four sections: growth and exploitation (r), conservation (k), collapse or release (omega), and reorganization (alpha).[36]

The first section deals with the growth of a system that represents the evolution of the ecosystem or the enterprise. After reaching the maximum point of growth, the system finds it difficult to adapt to new circumstances. This inertia represents the second portion of the adaptive cycle leading to the third portion of the cycle. Therefore, it represents the failure of the system unless it can adapt. The fourth, and thus last, section of the adaptive cycle is the re-evolution of the ecosystem, which initiates a re-growth phase for the system.[37], [38]

Figure 2: The adaptive cycle [36]

2.3.2 Engineering resilience

Engineering resilience is one of the essential capabilities of technical systems. Therefore, it describes how far complex systems interact in case of malfunctions or partial system failures. As a result, the redundancy of the technical systems plays a crucial role in the functionality of a company. Thus, system failures can be divided into two areas. First, there are internal disruptions that are generated by the company. For example, this can be caused by incorrect input of information into an operating system. [39], [40]

It should be noted that a company can very well prepare for internal system disorders and as a result these usually get under control quickly. Second, there are external factors that can lead to massive disruptions in production and business processes. These system impairments can be caused by third parties who are responsible for ensuring Internet access. It must be mentioned that no one has actual influence on these external factors. For this reason, a company can optimally adapt to all circumstances and thus try to prepare for any occurring disasters.

There are various ways to prepare complex systems for failures. One of the essential methods is a distributed system, in which the information is not only stored in one location but decentralized. Accordingly, this means that important company information can be stored on other systems in different locations. Thus, a total loss of data and information can be avoided. Another fundamental concept is the redundancy planning which deals with the preparation of different scenarios. Hence, the corporation can adjust to the most likely situations and can thus develop a disaster plan. As a result, system malfunctions can be resolved quickly and efficiently by staff. [41], [42]

Last but not least there is the possibility to protect the systems with adaptive systems and adaptive programming. As the name suggests, this allows the systems to adapt to different situations. Thus, for example, in the event of extended power failure, the power would be replaced by a generator. The system recognizes in time when it needs the energy to sustain the production process or business process. Ultimately, engineering resilience is of great importance to companies if they want to stay in the market in the long term. [43], [44]

2.3.3 Social resilience

Social resilience deals with physical flexibility to withstand crises. Personal and social resources are considered as far as they exist in a company. Employees are among the most essential resources of a company, as they contribute significantly to its success. Accordingly, proper human resources management and measures targeted at enhancing employees’ loyalty are necessary to retain staff in the company over the long term. Other factors that influence a company's resilience are for example family, social security, work environment, and appreciation. Besides, mental health plays a vital role in the workplace. These influences are crucial when employees have to deliver their peak performance in stressful situations. It is important that employees are able to identify with the company in which they work . [45], [46] Furthermore, social resilience leads to process factors, which play a decisive role in a company. Process factors describe the perceived perspectives of an employee in his work environment. Accordingly, employees prove particularly resilient once they have a strong cohesion with each other. Consequently, this is characterized by a collective overlap of values that people share among themselves. Additionally, the salary of an employee is a decisive influencing factor which can have positive as well as negative effects on the company. To put it in a nutshell, business success depends on the well-being of employees, making them one of the critical elements of a resilient business.[47], [48]

2.3.4 Ecological resilience

Resilience in ecosystems describes their dynamic stability properties. This theory addresses the ecological disturbances that have an impact on the ecosystem. Most of the time, the available resources are overstretched, and this often results in an imbalance. An example is the regeneration of forests. Due to the massive deforestation of areas in the South American rainforest for the extraction of palm oil and soy an imbalance arises. [49], [50]

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However, the cleared jungle was not restored and thus lost for the next generations of humans. Not only do humans lose an essential part of the global ecosystem, but also wildlife. By restricting the habitat of animals, essential species and plants are lost. If humans did not intervene in this ecosystem, the forest could regenerate itself and thus restore balance. It thus becomes clear how ecological resilience works in nature. Other examples include overfishing, intensive agriculture, marine pollution and human impact on ecosystems.[51], [52]

Furthermore, ecological resilience in the field of industrial economics deals with the sustainable use of resources. Through the first industrial revolution, we used fossil fuels to run our cars and meshes. The massive consumption of this natural resource has led to several side effects. One of the most well-known is the emission of greenhouse gases, which contribute substantially to global warming. The constant warming of our climate zones leads to a continuous melting of the polar caps. These developments will also have an impact on the economic system. The various stakeholders such as governments and consortia are redefining the rules of the game in the economic ecosystem. This will lead to massive changes in the functioning and business strategy of most companies. In this context, companies are proving particularly resilient when they can quickly adapt to new circumstances. Thus, companies will disappear from the market which cannot fit into the new situations in the economic ecosystem.[53], [54]

3 METHODS

This paper aims to address the research question and to provide answers through quantitative methods of empirical economic research. Particular attention is paid to the differences in the resilience and digital innovation of Industry 4.0. Therefore, three hypotheses are set up which are supported by literary sources. As a result, the hypotheses are shaped to be a logical formulation. Thus, they are verifiable by their formulations, either confirming or refuting the critical statement. When formulating the hypotheses, the conditions are recorded under which they are valid.[55]

Further, a hypothesis catalog with the related statements is created where they are split into dependent and independent variables. After collecting the data sets, they are statistically evaluated and compared with each other. It is evaluated whether family businesses have a higher resilience to non-family businesses, which is driven by industry 4.0.[56]

3.1 Hypothesis formation

With the issue of resilience, how it arises, and what the differences are between family businesses and non-family business, a large community of companies and research institutes has been involved in the research. In the previous section of this scientific work, the most important terms have already been explained in detail and presented consistently. In the next step, this existing knowledge is used and formulated into hypotheses. The dependent and independent variables are defined and presented in a hypothesis catalog. Subsequently, with the aid of the most

various statistical analysis methods, the collected data is examined. The analysis methods should shed light on how far the hypotheses apply or not.

The first hypothesis dealt with in this thesis comes from the research area of engineering resilience and describes how far companies can maintain their technical infrastructures in the event of malfunctions and partial failures. This increased robustness enables companies to survive in the market in the long run, without stopping the operation or production process which would bring massive financial damage. Therefore, this leads to the following hypothesis: "The stronger the engineering resilience of a company is, the better it can preserve essential system services in the event of disruptions."

The second hypothesis derives from social resilience, the theory of how far companies or ecosystems can cope with social conflicts. Most of these conflicts occur within the company. In order to maintain a healthy working environment, social competence must be maintained within a system. Accordingly, it is crucial that employees feel comfortable in their work environment and they are surrounded by a healthy work environment. Since the employees of a company represent its core capital, special attention should be paid to it. Thus, companies or ecosystems are particularly resilient once they reach a high level of social competence. Therefore, this leads to the following second hypothesis: "The higher the social resilience of a company is, the better it can handle social and personal crises in the organization." The third hypothesis emerged from the theory of ecological resilience. Accordingly, this describes the dynamic stability properties of resilient ecosystems. Hence, all the stakeholders of a company influence the ability to operate the business. As a result, legislative changes or political measures may impair the ability to operate or to produce. In order to counteract these changes, a robust corporate structure is necessary, so that measures can be taken in time to adapt the company to the new market situation. From this, the third and last hypothesis can be deduced: "The powerful the ecological resilience of a company is, the better the basic organizational structure of the business can be maintained." The resulting hypotheses described in the previous section are summarized in the following hypothesis catalog figure 12 in the appendix.

3.2 Research design

In order to answer the research question accurately, a dual approach is chosen to extract all relevant information. Firstly, an empirical questionnaire will be drawn up to record the essential perspectives of family and non-family businesses. Second, an expert interview will be conducted to examine relevant details which are essential to answer the research question. Thus, specific information can be collected that would otherwise not be captured by the empirical questionnaire. Consequently, the hypotheses developed in the chapter hypothesis formation are made empirically verifiable in the next step. For the three hypotheses, a Likert scale is used. The scale was limited to six possible answer options in order to obtain a clear allocation category. Thus, no

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middle answer possibility could allow distortion of the result. This interval-scaled solution helps to answer the research question clearly, highlighting the differences between the resilience of Industry 4.0 in family and non-family businesses. The exact item formulations can be found in the questionnaire figure 13, which is in the appendix. Furthermore, this study is an ex-post-facto design, more specifically a cross-sectional study. Additionally, the expert interview method is used to collect relevant information, which cannot be captured by a Likert-scale. Consequently, this is one of the qualitative methods of social research, drawing on the knowledge of an expert. As a result, a questionnaire has been developed which consists of ten core questions. In doing so, an attempt was made to specifically address the existing knowledge of companies on the topic of Industry 4.0. Additionally, it is associated with the resilience of the interviewing company.

3.3 Data collection

In order to test the hypotheses that had been developed, a written survey of four employees in the field of Industry 4.0 was conducted during each expert interview. As a result, seven experts were interviewed, and 28 employees surveyed. This dual approach to data collection was carried out because not all essential and relevant information on industrial resilience could be captured through a survey.

The interviews of the experts and the survey of the employees took place in the period from 20.05.2019 to 16.06.2019. Purposefully, four family and three non-family businesses were interviewed on the topic above. Therefore, sixteen employees in the family business and twelve employees in the non-family business were surveyed. The guide to the expert interview consists of ten key questions that attempt to highlight the differences in resilience between family and non-family businesses regarding Industry 4.0. Furthermore, the interview framework helped to get high-quality and topic-focused answers to the research question. Therefore, the experts were able to give specialist knowledge, which is crucial for the overall picture. In the expert interview, the average interview time was twenty-five minutes, which was sufficient to give an accurate answer to all ten questions. The seven expert interviews can be found in the appendix. The four-page questionnaire of the DIN A4 page size collects a total of forty-four data sets, using exclusively interval-scaled items for data collection. When creating the questionnaire, the Likert-Scala was used, which offers six choices between "do not agree" and "fully agree." A six-digit scale was deliberately chosen because it does not allow a neutral decision and thus tended the respondents in one of two directions. By doing so, an attempt is made to obtain a more specific and more precise response pattern. As a result, more accurate statements could be made about the collected data. The data collection questionnaire can be found in the appendix figure 13.

4 RESULTS

This section of the thesis shows the results of the survey and expert interview.

4.1 Results survey

In the following subsection deals with the results of the three hypotheses.

4.1.1 Hypothesis 1 on engineering resilience

The hypothesis described here is intended to control the extent to which engineering resilience can be strengthened by maintaining and improving IT infrastructures. The first hypothesis can be taken from the hypothesis catalog figure 12 in the appendix. First, to get an initial rough picture of the engineering resilience between family and non-family businesses, eight items were used for analysis. Two boxplots were created to highlight the difference. The following figure 3 shows the two box plots. As shown by the medians, family businesses have lower engineering resilience than non-family ones. Unfortunately, we cannot draw any further conclusions from the graph. The question that arises is why non-family companies see themselves well-positioned in engineering resilience.

Figure 3: Boxplot engineering resilience

In the postponed Pearson correlation test, we investigate whether the two interval-scaled variables of the first hypothesis have a linear relationship. In the evaluation, we can see that both variables have a positive correlation with each other. The correlation output shown in figure 4 displays the essential and meaningful correlation coefficient of 0.729916.

Figure 4: Correlation coefficient engineering resilience

In the next step, the p-value is used for the significance of the hypothesis. As can be seen in figure 5, the p-value is 0.03549, so it

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is below the value a = 0.05. Since the value is only under the value a, we can confirm the first hypothesis. Thus, we can assume that the stronger the engineering resilience of a business, the better the central systems can be maintained in the event of a disruption. As a result, businesses can withstand cyber-attacks and technical failures to the highest possible degree. It should be noted that technical systems cannot be one hundred percent secure. Therefore, companies should always consider the residual risk. To what extent this issue of resilience affects Industry 4.0 will be evident in the expert analysis.

Figure 5: p-value engineering resilience

4.1.2 Hypothesis 2 on social resilience

The hypotheses described here are designed to control the extent to which the social resilience of employees is strengthened. Psychosocial risks in the workplace should have no influence. Greater social resilience leads to more attentive, vital, and optimistic employees. Hypothesis two cam be taken from figure 12 in the appendix.

Consequently, to get an initial overview in the area of social resilience between family and non-family businesses, six items were used for analysis. To emphasize the difference, two boxplots were created. Figure 6 shows the two box plots. Here it becomes clear that the family business cannot attribute greater social resilience. Unfortunately, the graph does not provide any justification for this phenomenon. Accordingly, it will be explained later in the work why family business sees itself lower in social resilience.

Figure 6: Boxplot social resilience

In the subsequent Pearson correlation, it is examined whether the two interval-scaled variables of the second hypothesis have a linear relationship. In the evaluation, we can see that both variables correlate positively with each other. The correlation output shown in figure 7 shows the critical and meaningful correlation coefficient. Since this value is 0.8735864, the next step is the p-value for the significance of the hypothesis.

Figure 7: Correlation coefficient social resilience

As shown in figure 8, the p-value is 0.3688, so it is hugely above the value a = 0.05. Since the value does not provide a significant result, it proves that higher social resilience cannot better cushion the social and personal crises. Therefore, it confirms that the employees have a low affiliation with the companies. To what extent this issue of resilience affects Industry 4.0 will be evident in the expert analysis.

Figure 8: p-value social resilience

4.1.3 Hypothesis 3 on ecological resilience

The hypothesis described here is intended to control the extent to which the ecological resilience strengthens and maintains the entrepreneurial structures. As a result, companies with strong ecological resilience should have a good relationship with their stakeholders. Hypothesis three can be taken from figure 12 in the appendix.

Consequently, to get an initial rough picture in the area of ecological resilience between family and non-family businesses, eight items were used for analysis. Therefore, to highlight the difference, two boxplots were created. The following figure 9 shows the two box plots. Here it becomes clear that the non-family business maintains a significantly better bond with their stakeholders. Unfortunately, the graph does not provide any justification for this phenomenon. Therefore, further investigation of this difference is necessary.

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Figure 9: Boxplot ecological resilience

The adjusted Pearson correlation examines whether the two interval-scaled variables of the second hypothesis have a linear relationship. In the evaluation, we can see that both variables correlate positively with each other. The correlation output shown in the figure 10 shows the critical and meaningful correlation coefficient. Since this has a value of 0.765955, the p-value is used in the next step for the significance of the hypothesis.

Figure 10: Correlation coefficient ecological resilience

As can be seen in figure 11, the p-value is 0.2306, so it is hugely above the value a = 0.05. Since the value does not provide a significant result, it must be assumed that the stakeholder relationship does not affect ecological resilience. As a result, this means that companies, despite their relationship with banks, authorities, associations, customers, competitors, and politics, are not better protected from crises. To what extent this issue of resilience affects Industry 4.0 will be evident in the expert analysis.

Figure 11: p-value ecological resilience

4.2 Results expert interviews

The expert interviews provide information on the influence of resilience in the area of Industry 4.0. Accordingly, the differences in the approach of the topic between family and non-family businesses became clear. All three areas of resilience are considered in the context of Industry 4.0. By evaluating the expert interviews, a definition of the two corporate forms has emerged. Thus, family businesses describe Industry 4.0 as a technology that optimizes production, documentation, and logistics processes and makes them transparent. It emerges that the focus here is on digital processes. By contrast, family businesses do not define Industry 4.0 as a digital world that exists alongside the physical, allowing automated analysis of generated data. This approach goes one step further because it captures the overall picture of Industry 4.0. This consists of the efficient production process, as well as the digital connection between the documentation and fulfillment of the order.

Another essential point is engineering resilience, which plays a crucial role in the digital implementation of Industry 4.0, as it is designed to provide the highest level of security and efficiency. In order to have the highest possible security within the digital corporate structures, it is essential to secure the communication channels with a suitable encryption method. Hence, it can be ensured that third parties do not have access to relevant information. Another critical issue is the technical redundancy in the enterprise since machines and computers may stop working. This part of engineering resilience is costly because it requires the implementation of two identical production processes within the enterprise. Only in this way the highest possible redundancy can be ensured.

In this area, the different approaches of family and non-family businesses are apparent. Since the former is usually more risk-averse, the decision to implement Industry 4.0 means high financial risk. Additionally, family businesses have a significant advantage over non-family businesses, because they can integrate processes into their structure faster and more efficiently. In return, non-family businesses are often pioneers when it comes to integrating new technological achievements such as Industry 4.0 into their processes. Such decisions are usually considered very carefully and taken over a long period.

Due to the fact that the processes in the company are being digitized by Industry 4.0, businesses require more well-trained employees. Since this technological achievement is still very young, there is immense competition in the job market for the best minds. It is vital for companies to demonstrate a high level of social resilience as this enables them to retain their employees in the long term and not lose them through better offers. Meanwhile, it has become difficult for the family business to find competent professionals since the non-family businesses usually offer better salaries. As a result, the primary motivator for the employees is the level of salary.

After discussing these two vital areas of resilience, it will be necessary to consider ecological resilience in the area of Industry

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4.0. Accordingly, this deals with stakeholders who are necessary for the implementation of Industry 4.0. Since every digital process significantly changes the corporate structure, more legal challenges must be mastered. As a result, the most important topics are data protection, IT security, and the question of data ownership. These areas, which represent significant challenges for family and non-family businesses, can be mastered by a strict ecological resilience. On first sight, it seems more comfortable for companies to react to the legal framework if they can influence politics and legislation. However, as stated in the third hypothesis, this is not true. In most cases, the companies are being left down by their stakeholders because of the new legal situation. Accordingly, strong ecological resilience in the company does not guarantee future success in the area of Industry 4.0.

5 DISCUSSION

In order to be resilient in the area of Industry 4.0, it is essential to recognize the opportunities and risks at an early stage. The adaptive cycle, which was presented in the upper part of the thesis, can be enormously useful because it helps to capture the current company situation. Thus, this can show the blind spot of family and non-family businesses in a crisis. It is vital for companies to understand that entrepreneurial change is essential for the future development of the company. Hence, this allows the restructuring of old corporate structures, resulting in a perfect adaptation to the new digital environment. In order not to be driven out in the market, it is crucial to deal with the new technologies. The main goal of Industry 4.0 is to merge IT technology with current service and production technologies. This advance enables companies to ensure optimal utilization in their production process. Likewise, the implantation of Industry 4.0 leads to new innovative products and services. In order to enable a smooth implementation, it is essential to deal with the standards and legislation. It is advantageous if companies have well-trained employees who are familiar with the new digital processes and technologies. This also helps the implementation of the necessary security measures in the new processes. What is certain is that the fourth industrial revolution is on its way, forcing companies to integrate into the new digital economy.

6 CONCLUSION

In a rapidly changing world, it is becoming increasingly important to quickly adapt to new market conditions. As some experts like to say: It is not that “the big” are eating “the small”, but the fast the slow. Here, the approach of resilience management plays a particularly valuable role for family and non-family businesses. As a result, crises can be overcome faster and better if companies have a high degree of flexibility and adaptability. Besides, a long-term solution to the imminent crisis must be found if they want to stay in the market. It is essential to understand that there is often no quick fix for a crisis.

Furthermore, companies are expected to have a fast response time and to make the right decisions in the face of time-critical

challenges. For Industry 4.0, the focus should lie on engineering and social resilience. Consequently, employees play a crucial role in the future of the company, as they are responsible for the safe implementation and maintenance of Industry 4.0 technologies. It is also essential that employees recognize and correct errors in adequate time. An additional danger is the shutdown of the machine plant; therefore, all possible steps should be taken to secure the maintenance of the production process. This is the only way to guarantee optimal operating utilization. The last major threat comes from hacker attacks, which can significantly weaken the security of the IT network. In the worst case, the operation of the company may come to a standstill. Ultimately, it is relevant for family and non-family businesses to deal with the future topic of Industry 4.0; otherwise, they will have a hard time to survive in the international world market.

7 FUTURE RESEARCH

The work has shown that resilience is a crucial asset for family and non-family businesses. However, it is still necessary to question which motives employees have to work in a company. Since the salary is not the only pivotal component. Therefore, it is necessary to investigate further which motives make a workplace attractive. With this insight, social resilience can be increased immensely, and companies can better protect themselves for the future. There should be awareness that employees are the capital of every company and the key figures in the fourth industrial revolution.

8 REFLECTION

From a reflective point of view, there were two startling results in the master's thesis that had a significant impact on family and non-family businesses. The first finding was that the primary motivator for employees is still the salary. Therefore, this means that employees are willing to work in a poor work environment as long as the salary meets their expectations. The second finding is that the majority of companies that have a good relationship with politics, banks, and other institutions have limited influence on laws and policies. As a conclusion, it is one percent of the world's largest companies that have a direct impact on the legislation through their size and resources. Consequently, it would be interesting to understand what action needs to be taken to reach the point where a company can influence policies and laws.

ACKNOWLEDGMENT

I want to take this opportunity to thank all people and companies who have helped considerably in the preparation of this scientific work. Moreover, I would like to thank Ms. Emőke Takács and Mr. dhr. drs. Toon Abcouwer for their boundless engagement.

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APPENDIX

Hypothesis catalog

Nr. Hypothesis catalog 1

The stronger the engineering resilience of a company is, the better it can preserve essential system services in the event of disruptions.

DV: strength of engineering resilience IV: maintenance of the essential system

2

The higher the social resilience of a company is, the better it can handle social and personal crises in the organization.

DV: height of social resilience IV: social and personal crises

3

The more powerful the ecological resilience of a company is, the better the basic organizational structure of the business can be maintained.

DV: powerful of ecological resilience IV: basic organizational structure

DV = Dependent variable IV = Independent variable Figure 12: Hypothesis catalog

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Survey

Dear Sir, Madam,

Thank you for taking the time to complete the following survey. Your answers are a great support for completing our study on resilience in the area of Industry 4.0.

The survey will take about ten minutes and is completely anonymous, as we do not ask for personal information. We hope you find the questions interesting!

DV: strength of engineering resilience 1 2 3 4 5 6

Not true at all

The company is concerned about the resilience of its IT systems.

Industrial systems can be maintained in case of internal disturbances.

Industrial systems can be maintained in case of external disturbances.

System crashes occurred over the past five years.

Distributed systems are essential to the company.

Adaptive systems are used in the company.

Technical systems are essential to the company.

The company regularly invests in new adaptive and redundant systems.

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IV: maintenance of the essential systems 1 2 3 4 5 6

Not true at all

All systems are redundant in the company.

We routinely perform maintenance on the machines and computers.

The company always tries to be at the cutting edge of technology.

The company tries to digitize as many work processes as possible.

New technologies are implemented in the company as they facilitate the work processes.

The company has no prejudices against new technologies.

Industry 4.0 increases the production capacity of the company.

Companies can achieve better utilization through Industry 4.0.

The company is committed to new scientific-technological projects.

DV: social resilience 1 2 3 4 5 6

Not true at all

The company addresses the emotional needs of employees.

The relationship between the companies and the employees is strong.

The company tolerates mistakes.

The company is problem-solving oriented.

The company regularly invests in the team building of employees.

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IV: social and personal crises 1 2 3 4 5 6

Not true at all

Training of employees is essential.

Cultural diversity in the company is essential.

Employees can identify themselves with the company.

The company is tolerant towards its employees.

Thinking out of the box is vital to the company.

Every employee is respected in the company.

The salary is the main motivation for employees.

Employees feel comfortable and appreciated in the company.

DV: powerful of ecological resilience 1 2 3 4 5 6

Not true at all

The company pursues a sustainable strategy.

The company keeps in touch with its stakeholders.

The company can recover quickly after a crises.

Dynamics are essential in the company.

The company is covered against risks.

The economic future of the company is secured.

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IV: basic organizational structure 1 2 3 4 5 6

Not true at all

The company has comparative advantages.

The business goals are in reach to achieve.

Cost advantages are crucial to the company.

The company is interested in current politics.

The company achieves synergy effects.

The company has a robust internal flow of information.

The company has a good differentiation strategy.

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Expert Interviews

1. Expert interview with the company Hel-Wacht Holding

Q 1. What experience have you had so far with resilience in the area of Industry 4.0?

A: The company has so far gained excellent experience in the area of Industry 4.0. Processes were simplified and automated to a high degree.

Q 2. For those who do not deal with the topic of industry 4.0, how would you explain this content? A: Let technology support you so that information can be used transparently.

Q 3. To what extent is your company dealing with the topics of resilience and Industry 4.0?

A: The company is continuously concerned with resilience and Industry 4.0 issues. Especially in the area of new products and technical concepts. The theory of "Security by Design" is essential for the business success.

Q 4. Do you see a difference in the approach to resilience between family and non-family businesses?

A: That depends on the dimension. The smaller the company, the harder the implementation. Besides, there is the cost factor of refinancing. Small businesses can score with their social dimension; therefore, they can respond better to changes, which gives them an advantage. Additionally, the hierarchy between the employee and the decision maker is flat.

Q 5. What challenges do you expect with the introduction of Industry 4.0 in the production process?

A: There is no challenge as safety is a continuous component. The most significant uncertainty harbors the human being because this is the weak point in the process through his misconduct.

Q 6. What challenges do you see in implanting good resilience?

A: Make a concept and stick to it. It should be simple and not complex so that it can be respected.

Q 7. To what extent do you see entrepreneurial change as an essential step to be resilient in the future?

A: Entrepreneurial change is vital, as every ten years, significant technological steps happen. This transformation of the company leads to new potential opportunities. Here, the spirit of innovation is a balancing act, as it brings with it an existential financial risk. Accordingly, it is essential always to pay attention to the amortization period.

Q 8. To what extent will business processes be changed by Industry 4.0?

A: The fourth industrial revolution will lead to massive process changes. There will be a change in how we collect information between products and customers. By automatically detecting information and patterns, errors in the process can be avoided. Therefore, more specialized employees are needed, while the workers in the company should remain the same. Thus, the high degree of complexity of this technological revolution can undoubtedly be countered in the future.

Q 9. What impact does a good resilience have on the future of your company? A: Without technical and social resilience, the company and its products will not last.

Q 10. How do you see the company in the future with the ever faster-changing market requirements?

A: The company must remain innovative in the future. The further development of the products is a crucial factor. Equally important is the networking of data and information about the products. Additionally, there will be an increase in the complexity of the data, as a result of which new data protection issues must also be clarified.

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2. Expert interview with the company Berger Schinken

Q 1. What experience have you had so far with resilience in the area of Industry 4.0? A: First experiences have been made in the area of planning and optimization of production.

Q 2. For those who do not deal with the topic of industry 4.0, how would you explain this content?

A: Industry 4.0 is the networking of production facilities as well as the evaluation and optimization of supply chains. Thus, fewer personnel and resources are needed in the value chain.

Q 3. To what extent is your company dealing with the topics of resilience and Industry 4.0?

A: So far, the company is dealing extensively with resilience. In the area of Industry 4.0, the company has too little experience knowledge.

A: Yes, the difference is between family and non-family business is the hierarchy and how employees are managed.

Q 5. What challenges do you expect with the introduction of Industry 4.0 in the production process? A: The challenge is to filter data meaningfully and to get information from it.

A: The technical resilience represents the least problem because the company can protect itself well. A significant danger relates to the social component, which is the most notable vulnerability. In order to tackle this challenge adequately, the mindset of employees should be optimized through training and rules.

Q 7. To what extent do you see entrepreneurial change as an essential step to be resilient in the future?

A: Entrepreneurial change plays an important role. Data is collected everywhere, and this should be perceived as a new potential opportunity.

A: The production and planning processes will be optimized in the future. However, this will not happen in the sales process.

Q 9. What impact does a good resilience have on the future of your company? A: Through optimized resilience, the company's sales can be increased.

A: The company is well prepared for the future if the company does not forget about Industry 4.0. It should be noted that not all technological developments have to be made, but only those which are necessary.

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3. Expert interview with the company Drei Hudgenson

Q 1. What experience have you had so far with resilience in the area of Industry 4.0? A: So far, the company has made some touching points in the M2M area in customer projects.

Q 2. For those who do not deal with the topic of industry 4.0, how would you explain this content?

A: Industry 4.0 is a digitization and networking of machine data that allow conclusions to be drawn on the gathered information. Thus, predictive maintenance is possible.

Q 3. To what extent is your company dealing with the topics of resilience and Industry 4.0? A: The company is very involved with this material, but it is not the core subject in the company.

A: Yes, family businesses are more likely not to replace their employees with machines. Non-family businesses are much further developed in Industry 4.0 and will, in the long run, replace their employees with more efficient machines.

Q 5. What challenges do you expect with the introduction of Industry 4.0 in the production process? A: Modern adaptations will have to be carried out as no technical system will work immediately.

A: Far too many consultants try to handle different aspects, but they cannot present a holistic solution.

Q 7. To what extent do you see entrepreneurial change as an essential step to be resilient in the future? A: Industry 4.0 will change a lot in the future, enabling a new and more efficient production chain.

A: Entrepreneurial change is a significant step for the future in order to have a good position in the market.

Q 9. What impact does a good resilience have on the future of your company?

A: The impact of good resilience is difficult to estimate from today's perspective. It will be necessary to jump on the path of new technologies in order to have sufficient resilience in the future.

A: The future of the company looks very good, as all essential positions in the company are staffed with competent professionals. Likewise, new challenges are gladly mastered in the company.