Social Innovation in Family Business: An Empirical Analysis in the UK

Abstract

Social innovation is rapidly developing all over the world, with new institutions and tools, with increasing confidence and evidence of impact. There is a growing interest among corporate players and industry leaders - supported by a growing recognition that innovation within the private sector is changing. Businesses are responding to the growing importance of social sectors in the economy. Emphasis on reputation, local embeddedness, and long-term orientation make family firms the type of organization that could engage in social innovation to a higher extent than other businesses. Indeed, pursuing social innovation generates benefits through exposure to various external stakeholders, co-developing innovations with partners and creating inter-partner synergies. This exploratory paper introduces a measure of social innovation for private business, borrowing and adapting existing models for public enterprises, and tests the effect of family involvement on the adoption of social innovation practices. Our results indicate that family involvement in management positively affects social innovation, while family involvement in governance has a negative impact on it. Moreover, multigenerational involvement positively moderates the relationship between family involvement in management and social innovation, while having the second generation in control negatively moderates the relationship between family involvement in governance and social innovation.