Lean innovation: Family firm succession and patenting strategy in a dynamic institutional landscape

Abstract

The paper is motivated by recent findings about family firms (FFs) ability to ‘do more with less’ in the innovation process, which we dub ‘lean innovation’. We consider lean innovation patenting strategies in an emerging market context that is undergoing improvement in its intellectual property protection (IPP) regime. Grounded in upper echelons theory we expect that the initiation of an intra-family succession will lead to generational shift in a FFs approach to IPP, as evinced in its patenting strategy. Applying a difference in difference methodology we are able to compare FFs who have undertaken an intra-family succession with FFs who have not yet initiated a succession process. Further, we consider the second difference as a strategy change between the pre-and post-succession period thereby isolating the effects of the post-succession change on patenting strategy. We also distinguish between different patent types (invention, utility, and design), and consider FF propensity to patent, and patent conversion rates. Based on generational differences between founders and successors we find successors are significant adopters of lean innovation patenting strategies. We add to the sparse literature on succession in emerging market FFs and contribute to improved understandings of long-term FF strategic adaptation in a dynamic institutional landscape.