Socioemotional wealth and the innovativeness of family SMEs in the United Arab Emirates

Abstract

Why are some family SMEs more innovative than others? We use the heterogeneity within family SMEs to explore how their socioemotional wealth (SEW) affects innovativeness. The ubiquity of smaller family firms means that their innovativeness is critical for policymakers, such as those in the United Arab Emirates, seeking innovation-led development. We conduct a multi-case study analysis of SEW and innovativeness in fourteen family SMEs based in the United Arab Emirates. Participants were from a range of sectors and across the employment size-range of family SMEs. None of the most innovative family SMEs had highly family-centric socioemotional wealth. High family-centricity was however evident in all the least innovative firms who survived on reputation and incremental customer or supplier-driven improvements. The least innovative firms were amongst the smallest but not the youngest, with firm age not influential for innovativeness. The paper proposes redressing family-centric SEW preferences to raise the innovativeness of family SMEs. This will involve longer-term decision-making that gives greater consideration to the interests of external stakeholder as well as future generations of the family.