Abstract
Through the lens of the signaling theory, this study uses survey-based data from manufacturing SMEs in Northern Italy to test whether the adoption of work-family initiatives (WFIs), formal and voluntary actions undertaken by a firm to support the work-life balance of its employees, affects the likelihood of an SME to engage in innovation. Additionally, we explore whether family (versus non-family) SMEs that adopt WFIs are more likely to innovate, because of their stewardship culture. Our results show that WFIs affect SME’s innovation outputs when they are extensively adopted. Counterintuitively, our results indicate that the family ownership downplays the effect of WFIs on innovation, i.e., that family SMEs that adopt WFIs are less likely to innovate than non-family SMEs. Overall, our findings support the view of SMEs as firms in which the employee’s potential and the ownership type are crucial elements for enhancing innovation.
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