Abstract
In this paper, we examine how CEO succession affects family firms’ innovation activities. We take on a broad perspective and consider the effect of a CEO succession on innovation input as well as different kinds of innovation output (product, process and organizational innovation) by following an upper echelons perspective. For our analyses, we use a longitudinal data set of small and medium-sized German family firms for the period 2001 to 2017 and apply a matching approach. Our results indicate that CEO succession is associated with a higher likelihood of family firms being involved in innovation activities. Family firms that experienced a CEO succession are more likely to introduce an innovation in the work organization. This holds in particular for those family firms that had no innovation activities before the CEO succession. However, we do not see an effect on the likelihood of introducing a product innovation. Thus, CEO succession leads primarily to a change in “how things are done”.
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