Determinants of Green Innovation in Family Firms

Abstract

Family firms represent a unique kind of company and extent research characterizes them to be rather risk-averse in their commitment to innovation but consider them to be more efficient in their innovation efforts in contrast to non-family firms. Although family firms have a widespread impact on the worldwide economy, there has been limited research on the heterogeneity in their innovation behavior in both family firm and innovation literature. The growing body of research on green innovation indicates that it is a distinct type of innovation due to its unique characteristics and common knowledge on general innovation in family firms cannot be transferred to their behavior with respect to green innovation. Therefore, we aim to investigate why family firms engage in green innovation and which factors determine their green innovation performance. To investigate this new phenomenon and contribute to theory, we conduct a multiple-case study based on a sample of German family firms from different industries by collecting and analyzing data from both publicly available sources and interviews conducted with the top management of these firms. Thereby, these firms cover the spectrum family firm heterogeneity in this field ranging from high to low green innovation performance and their approach to green innovation supports our argumentation. Our findings suggest that family firms develop and adopt green innovation due to their SEW aspirations, as these lead them to think and invest for the long term. If they engage in the development and implementation of green innovation, however, their success depends on their familiness, namely their social capital, human capital, and financial capital, as these resources are crucial to successfully manage the complexity of the green innovation development process. This study is equally important for researchers, practitioners, and policy makers as it highlights the key obstacles and requirements for family firms to successfully develop and implement green innovation.