Abstract
Drawing on the resource-based view of the firm, this study investigates the relationship between human capital (employees’ experience, knowledge and technical skills, managerial talent) and innovativeness (propensity to innovate) in a sample of 478 family firms taken from a cross-country dataset (STEP Project). Furthermore, we consider the moderating effect of the proportion of family members sitting on the board of directors (family board ratio). The main findings highlight that there is a positive relationship between human capital and family firm innovativeness. Moreover, family board ratio positively moderates the relationship between human capital and innovativeness in such a way that when the family board ratio is high, the relationship between human capital and innovativeness is stronger. This result is weaker when multiple family generations are actively involved in the firm. In summary, family members sitting on the board of directors focus more attention on people and for this reason, play an important strategic leadership role in valorizing human capital that fosters more innovativeness.
Highlights
Innovation is the establishment of new concepts, procedures and/or technologies in an organization (Kraus et al 2012)
Drawing on the resource-based view (RBV) of the firm, the aim of this study was to investigate the relationship between human capital and innovativeness in a sample of 478 FFs
Contrary to the general expectation and previous studies that emphasize a negative relation between family involvement and innovation (Kor 2006), we found that increasing family involvement in boards had a positive effect on innovativeness
Summary
Innovation is the establishment of new concepts, procedures and/or technologies in an organization (Kraus et al 2012). There has been increasing research interest in innovation in family firms (hereafter FFs) (e.g., Chrisman et al 2015; Llach et al 2012; De Massis et al 2015; Calabrò et al 2019). It is widely recognized that familiness is a distinctive feature of FFs (e.g., Arregle et al 2007; Pearson et al 2008; Schulze et al 2003) Because of their strong socioemotional ties to their firms, founders prioritize maintaining control of their firm. We know very little about how family involvement in boards may affect innovation in FFs
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