Abstract
This study seeks to examine the relationship between innovation and knowledge in family versus non-family businesses with regard to performance. Data from 430 small and medium-sized enterprises were analyzed through hierarchical regression analysis, and innovation was found to be a significant factor in both family and non-family samples. However, knowledge in family firms was also found to be significant with innovation. Implications for theory and practice are discussed that may provide possible competitive advantage for small family firms.
Highlights
Innovation in new products/services and the implementation of key processes are becoming vital sources for firm competitive advantage (Rumelt 1984; Liao et al 2009)
Firm size The definition for an SME was discussed based on definitions regarding employment; for Australia, this is less than 100 employees
The non-family sample indicates that the R2 explains 22% of the variance and is still significant at the 1% level. These results suggest that evidence exists on the importance of innovation in both family and non-family firms
Summary
Innovation in new products/services and the implementation of key processes are becoming vital sources for firm competitive advantage (Rumelt 1984; Liao et al 2009). Research suggests that firms that engage in developing innovative products and services are positioned to compete more successfully through the development of new products and processes, before competitors in first-mover advantage, increasing market share, return on investment (ROI), and overall firm success (Allocca and Kessler 2006; Gudmunson et al 2003). High levels of performance can facilitate firm growth and subsequent profit performance, which in turn can yield employment gains and contribute to the general economic health of a state, region, or nation (Wolff and Pett 2006)
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