Familiar but also radical? The moderating role of regional clusters for family firms in the emergence of radical innovation

Abstract

AbstractFamily firms are widely acknowledged to be the most predominant form of organization and hold a great relevance in most economies. Nevertheless, despite their popularity, research has thus far yielded inconsistent findings with regard to their innovative performance. This paper aims to address this research gap by focussing on a specific form of innovation: radical innovation. It seeks to determine the propensity of family firms to generate such innovations. Furthermore, by considering the heterogeneity between regions and firms, this paper also investigates the potential moderating effects of being located in a regional cluster and firm size. Based on various data sources, it is empirically shown that family firms are on average less capable of producing radical innovation than non-family firms. However, the corresponding regional context matters in this regard. By being located within regional clusters, family firms can reap the benefits of localization externalities, leading to produce more radical innovations than being located outside regional clusters.