Innovation In Family Businesses Research Articles

Introducing professional managers, salary incentive and family business innovation

This paper provides an in-depth discussion of the impact of introducing professional managers on the innovation of family firms for a sample of A-share listed companies in China from 2017 to 2022. The findings show that introducing professional managers in family firms significantly positively contributes to corporate innovation. In addition, the study finds that both equity and cash incentives given to professional managers are conducive to further promoting corporate innovation. The results of this study are of great practical significance for how family firms can rationally utilize professional managers to enhance corporate innovation.

Family business innovation: an updated bibliometric study to propose future research agenda

Purpose This study aims to identify the updated areas in family business innovation (FBI) and propose a future research agenda for scholars in the domain. Design/methodology/approach Using VOSviewer and Bibliometrix-R, this study conducts a bibliometric analysis on 699 Scopus-indexed journal articles/reviews to analyse FBI’s performance and intellectual structure. Findings This study provides up-to-date assessment through performance analysis. Through the co-citation, co-word and thematic evolution analysis, this study unpacks FBI themes/topics to propose possible future avenues. Practical implications The findings provide insights into resilient innovation-driven family businesses to enlighten the next generation of family business leaders with essential innovation knowledge for sustainable growth. Originality/value This study complements past FBI reviews by offering renewed perspectives that future research can focus on, in turn, enhancing literature on contemporary, relevant topical issues in the FBI post-COVID-19 pandemic.

EFFECT OF SOCIAL CAPITAL, FAMILY BUSINESS INNOVATION, AND DYNAMIC CAPABILITIES ON THE ORGANIZATIONAL AGILITY OF FAMILY BUSINESS

The research is conducted to determine the effect of Social Capital (X1), Family Business Innovation (X2), and Dynamic capabilities (X3) on Organizational Agility (Y). The research is conducted using the quantitative method, applying the 5-Likert scale questionnaires to 180 Respondents who are family business members, by utilizing the purposive sampling method. This research utilizes multiple linear regression analysis to analyze the factors that provide significant effects on organizational agility. All three factors (Social Capital, Family Business Innovation and Dynamic capabilities) are reliable and valid according to the SPSS result after further calculation The result of the research presents the positive relationship and the significant impact that Social Capital, Family Business Innovation, and Dynamic Capabilities have on Organizational Agility in Family Businesses.

“Spousal cogovernance” and enterprise innovation: an empirical study based on China’s listed family businesses

ABSTRACT Family businesses significantly influence the private economy and economic growth. Achieving sustainable development and innovation-driven national strategies necessitates fostering innovation in family businesses. Innovation enables businesses to prosper, mitigate market risks, and facilitate intergenerational succession. In contemporary Chinese family businesses, actual controllers, particularly spouses, play a crucial role in management and strategy formulation, which influences corporate innovation through synergistic effects and enhanced decision-making efficiency. This study investigates the impact of spousal cogovernance on family business innovation by analysing data from A-share listed Chinese family businesses from 2009 to 2020. The findings indicate that spousal cogovernance enhances innovation by promoting harmonious relationships and strong inheritance intentions. However, the number of actual controllers and Confucian culture may adversely affect the promotion of innovation. Moreover, agency costs serve as a mediating factor in driving innovation, and minimizing these costs could enhance innovation. In conclusion, this research expands the knowledge of family governance and innovation and illuminates the differences resulting from internal structural changes in Chinese family businesses. We underscore the significance of nurturing innovation and development in spousal cogoverned family enterprises.

Family Business Succession, Innovation, and Compensation: What You Need to Know

Family Business Succession, Innovation, and Compensation: What You Need to Know

Role of Female Successors in Family Business Innovation: Some Insights From the Largest Matrilineal Muslim Society

This study was conducted to examine innovation and succession planning of some Minangkabau family business using the institutional logic approach. It is important to note that the Minangkabau is completely a Muslim society in Indonesia and one of the largest matrilineal societies in the world. Moreover, innovation and succession planning are important factors and interlinked concepts signifying the dynamics of a family business. A qualitative approach was implemented in this study and this involved interviewing 17 Minangkabau people from six family businesses after which thematic analysis was utilized to examine the collected data. It was discovered that there were two consecutive major patterns regarding family business innovation and succession planning based on business, community or socio-cultural values, and family logic. Moreover, two possible paths were identified with the interviewees observed to have one which involved the importance of succession planning and its consequences on business innovation. This means family business innovation in real organizations needs to be based on trustworthiness as well as the adoption of appropriate changes and strategies.

Innovation Promoter or Inhibitor? Non-Family CEO's Effect on Innovation in Family Businesses

Increasing scholarly and practical attention is being paid to determining whether a nonfamily chief executive officer (NFC) is a remedy for the lack of firm innovativeness in the face of ever-changing markets. Departing from the inconclusive findings of NFC research, this article aims to revisit the NFC effect on a family firm's investment in innovation, which is subject to the contextual influence of governance arrangements. In a sample of 6201 firm-year observations of Taiwanese family firms in high-tech industries in the period from 2002 to 2017, we found that the mixed relationship between the NFC and innovation investment is better clarified by considering family involvement in management (FIM) and board independence (BI), both of which yield significantly negative and positive moderating effects on the innovation investment of NFCs, respectively. This article further examines the configurational effect of two moderators on the main relationship, and shows that the negative effect of FIM not only outweighs, but also deteriorates, the positive moderating effect of BI. Our findings contribute not only to family business research, but also to innovation literature by arguing that the risk-taking orientation of an NFC is not universally held, but rather is deliberately arranged for effect.

Common institutional ownership and green innovation in family businesses: Evidence from China

AbstractGiven the ubiquity of family businesses and the growing importance of ecological sustainability, it is crucial to promote family businesses to carry out green innovation activities and enhance their green innovation capability. In recent years, the prevalence of common institutional ownership in capital markets has attracted the attention of the academic community. Drawing on socioemotional wealth theory and strategic reference point theory, this paper tries to explore the impact of common institutional ownership on green innovation in family businesses. Using data from Chinese‐listed family businesses from 2009 to 2021, this paper finds that common institutional ownership can facilitate green innovation in family businesses. The higher the degree of their linkage and the greater the shareholding, the more pronounced the synergistic effect. The findings remained valid after considering the endogeneity issue and conducting robustness tests. The mechanism test suggests that common institutional ownership enhances green innovation in family businesses by improving the internal control quality and reducing financing constraints. This paper contributes to the study of how to effectively facilitate green innovation in family businesses by identifying the common institutional ownership from the perspective of external governance mechanisms. In addition, this paper enriches the research on the economic consequences of common institutional ownership. Finally, various practical implications for family businesses and policymakers may be realized, which may help family businesses to enhance their green innovation capabilities and contribute to the green transformation of society.

Family business succession and innovation: a systematic literature review

This study systematizes and classifies the state-of-the-art of knowledge about innovation and succession in family businesses. Our systematic literature review details the existing knowledge and establishes new points of departure for future research. This research analyzes 32 articles retrieved from the Web of Science database and makes recourse to bibliographic coupling through the VOS viewer software to identify the main lines of research on the theme of innovation and succession in family businesses before advancing new topics for future research. The results identify and classify the prevailing theoretical foci in this domain to: (i) Impact of Succession on Innovation; (ii) Succession and Sharing of Knowledge; and (iii) Obstacles to Innovation. This study also shows that the succession process hinders investment in innovation and that family businesses’ innovation capacity represents life or death for these businesses. This review also presents a framework that shows how succession processes impact innovation in family businesses.

"De-Familization" and Family Business Innovation

Can de-familization promote innovation in family firms? Existing research suggests that "de-familization" can promote innovation, but this may be due to the lack of dynamic attention to the process of "de-familization". Based on this, this paper investigates the impact of "de-familization" on the innovation of family firms, using Chinese listed family firms from 2008 to 2020 as a research sample. It is found that there is an inverted U-shaped relationship between "de-familization" and family firms' innovation investment, while family members as CEOs and a favorable external institutional environment weaken this effect. This paper analyzes the impact of the degree of "de-familization" on the innovation level of family firms from a dynamic perspective, combining social-emotional wealth theory and agency theory, and thus enriches the research on the succession of family firms by professional managers in the context of inheritance, and provides new references for the selection of family business owners' successors.

Family involvement and innovation

This literature review systematizes and analyzes the results of studies on innovation in family businesses, considering the involvement of the family. Following the protocol of a systematic review of literature, relevant studies on the topic were identified and analyzed. The results show that family businesses have distinct resources and capacities that are difficult to duplicate, resulting from the interaction of the family system with the business system itself. These capabilities enable family members to interact with the business system in a quick, flexible, and unstructured way, which promotes company competition and supports innovation. This study contributes to understanding that family involvement may increase and restrict the components of the capacity for innovation and these effects may imply the competitive advantage of the family business. The effects of family involvement demonstrate the heterogeneity among family businesses and offer insight into how these companies manage and are capable of maximizing or minimizing the effects of such involvement on company innovation. At the end of this review, we present a structure of topics related to innovation based on family involvement derived from the categorization and analysis of the reviewed studies.

Origin matters: The institution imprint effect and green innovation in family businesses

We investigate how institutional environments in the founding phase influence the pro-environment activities of family businesses, and how origins shape present-day norms, routines and procedures through an imprint effect. By exploiting the unique heterogeneity of family business origin in China, we find that restructured family businesses have a higher degree of green innovation than their entrepreneurial counterparts. The mechanism analyses suggest that the initial institutions varied across family business origins, resulting in divergent institutional environments and distinguishing green innovation performances. Our results highlight the lasting effects of the early governance system on modern-day family businesses.

Influence of Successors’ Entrepreneurial Competencies on Performance in Family-Owned Small and Medium Enterprises in Arusha City, Tanzania

This paper examines attributes of successors’ entrepreneurial competencies such as risk-taking propensity, ability to exploit business opportunities, innovation and commitment in family businesses in Arusha City, Tanzania. A cross-sectional research design was employed using a quantitative survey approach, in which two hundred family business successors provided data for this paper. The data were analysed using the Hierarchical Regression Model to assess the influence of successors’ entrepreneurial competencies on the performance of family-owned SMEs. The findings indicate that successors’ risktaking propensity and the ability to exploit business opportunities influence the performance of family-owned SMEs. The paper concludes that familyowned SMEs managed by successors who can take calculated risks and are also able to exploit business opportunities are in a good position to realize better performance in terms of net profit. It is recommended that family business founders should build their successors’ entrepreneurial competencies.

How does family ownership and management influence green innovation of family firms: evidence from China

PurposeBased on the socio-emotional wealth and agency theories, this study empirically investigates the impact of family ownership and management on green innovation (GI) in family businesses, as well as the moderating effects of institutional environmental support factors, namely, the technological achievement marketisation index and the market-rule-of law index.Design/methodology/approachThis study empirically tests the hypotheses based on a sample of listed Chinese family companies with A-shares in 14 heavily polluting industries from 2009 to 2019.FindingsThere is a U-shaped relationship between the percentage of family ownership and GI, and an inverted U-shaped relationship between the degree of family management and GI. Additionally, different institutional environmental support factors affect these relationships in different ways. As the technological achievement marketisation index increases, the U-shaped relationship between the percentage of family ownership and GI becomes steeper, while the inverted U-shaped relationship between the degree of family management and GI becomes smoother. The market rule-of-law index weakens the U-shaped relationship between family ownership and GI.Originality/valueFirst, the authors enrich the research on the driving factors of GI from the perspective of the most essential heterogeneity of family businesses. This study shows nonlinear and opposite effects of family ownership and management on GI in family firms. Second, this study contributes to the literature on family firm innovation. GI, not considered by researchers, is regarded as an important deficiency in research on innovation in family businesses. Therefore, this study fills that gap. Third, the study expands research on moderating effects in the literature on GI from the perspective of institutional environmental support factors.

Economic Policy Uncertainty and Family Firm Innovation: Evidence From Listed Companies in China

With the advancement of China’s economic transformation, the impact of economic policy uncertainty on family firms has become increasingly significant. The “familism” of family firms makes them more motivated to maintain family harmony, pursue innovative activities, and the long-term development of enterprises when faced with economic policy uncertainty. In this paper, we employed the data of listed Chinese family firms from 2010 to 2018 to analyze the impact of economic policy uncertainty on family business innovation activities, analyze the inherent characteristics of family firm innovation, and find the path that enables the innovative activities of family firms and provides a valuable experience for the innovation of private enterprises in economic policy uncertainty. We provide evidence that economic policy uncertainty positively relates to family firm innovation. Moreover, the relationship is affected by factors such as directors’ executive background and access to state-owned equity. Further analysis indicates that economic policy uncertainty can promote family firms’ innovation activities by improving their risk-taking, internal capital market circulation, and reducing political connections.

How organizational readiness for digital innovation shapes digital business model innovation in family businesses

PurposeFamily businesses often lack sufficient knowledge about digital business model innovation digital business model innovation (BMI). This study's purpose was to analyze how and when organizational readiness for digital innovation exerts a positive impact on family businesses' digital BMI. To do so, the authors examined the mediating effect of the familiness learning mechanism and the moderating effect of family involvement on this relationship.Design/methodology/approachA quantitative survey method was used to collect the data for this study. Using a sample of 282 family businesses involved in manufacturing in China, the authors conducted hierarchical regression analyses to evaluate the authors' theoretical model.FindingsThe results of this work demonstrate a positive relationship between organizational readiness for digital innovation and family businesses' digital BMI, and the find that the familiness learning mechanism mediates this relationship. The findings also show that second-generation family involvement in management moderates the direct effect of organizational readiness for digital innovation on the familiness learning mechanism, as well as the indirect effect of organizational readiness for digital innovation on digital BMI via the familiness learning mechanism. Moreover, the results establish that family involvement in ownership moderates the direct effect of the familiness learning mechanism on digital BMI, as well as the indirect effect of organizational readiness for digital innovation on digital BMI via the familiness learning mechanism.Practical implicationsThis study provides practical contributions to the literature on family businesses and to public policy, providing concrete suggestions for fostering digital innovation in family enterprises. This study also enriches our understanding of the unique conditions by which family businesses can successfully implement digital BMI.Originality/valueThis research confirms that organizational readiness for digital innovation is an antecedent of digital BMI. This finding offers a new perspective that helps explain what might lead family businesses to engage in digital BMI. This study also places the familiness learning mechanism into a theoretical framework, which expands the current understanding of how organizational readiness for digital innovation facilitates digital BMI. Moreover, this work provides new insights into the boundary conditions by which organizational readiness for digital innovation affects the digital BMI of family businesses in terms of second-generation family involvement in management and family involvement in ownership.

Financial Products and Family Business Innovation Strategy

Abstract This paper studies the influence of purchasing financial products (FPs) on the innovation strategy of family businesses (FBs) under the background of Chinese system. Applying a difference in difference methodology we are able to compare FBs who have purchased FPs with FBs who have not yet purchased FPs, and compare FBs that have purchased FPs before and after the purchase. We distinguish between different patent types (invention, utility, and design), and find that purchasing FPs significantly increase the design patents of FBs. That means buying FPs will shift innovation direction to safer and more economical path. Moreover, the effect of purchasing FPs on innovation outputs is governed by institutional ownership, government subsidy, and R&D personnel ratio. This paper contributes to our understanding of the important role of risk aversion in technological innovation strategy of FBs.

Influence of socioemotional wealth on non-family managers’ risk taking and product innovation in family businesses

PurposeThere is a growing interest in understanding family firms’ strategic behavior using the socioemotional wealth (SEW) perspective. This study explores how family SEW dimensions influence non-family managers’ attitudes toward risk in the context of product innovation. This study also examines whether managerial risk-taking mediates the relationship between SEW and product innovation.Design/methodology/approachThe study uses a sample of 150 family firms in the United Arab Emirates and collects data from family owners and non-family managers via self-administered questionnaires. The study uses SmartPLS structural equation modeling to test the conceptual model and the proposed hypotheses.FindingsThe results indicate that multidimensional SEW influences non-family managers’ risk-taking behavior in different magnitudes and directions, thus impacting firms’ product innovation. Moreover, risk-taking partially mediates the relationship between SEW dimensions and product innovation.Originality/valueWhile product innovation could be seen as a loss scenario for family firms due to the potential loss of SEW, growth, continuity and reputation outweighed the desire to maintain control for the firms in this sample. Thus, these firms encourage non-family managers to take risks in product innovation.

Family firms, women, and innovation

Frame of the research: We aim to inform family business literature and family business managers on the effect to include women as managers by providing empirical evidence on their impact on innovation. Purpose of the paper: The paper investigates the impact of female directors on innovation in Family Businesses (FBs). We assume that the presence of women, due to recent generations with the presence of daughters or due to marriages involving third parties, could be more common than in non-FBs. Methodology: We tested our hypotheses on a sample of 755 Italian FBs through a count data model. Findings: Our findings show how and when the invisible women became visible and their effect on innovation performance. Prejudice against women in FBs is detrimental to innovation; however, both the presence of female family members in control positions and the presence of a critical mass helps to mitigate the effect of prejudice on innovation. Research limits: The sample is limited to Italian firms only. The social dynamics and the role of women in the entrepreneurial arena are strongly influenced by the institutional system in which the firm operates. Practical implications: Our findings will be relevant to family business owners and managers with regard to their innovation strategy. A greater understanding of the relationship between female directors and innovation may contribute to increasing the number of women in these important roles. Originality of the paper: We extend our understanding of the effects on innovation of the involvement of female family members on the board of directors. We discuss the invisibility of female family members. We enhance our growing knowledge on female directors in family businesses by studying women’s roles as president or vice president, in relation to innovation.

A Study on the Relationship between the Second-generation Involvement Time and Family Business Innovation Investment

This paper takes the listed family firms in China’s manufacturing industry from 2008 to 2017 as the sample, and uses a multiple regression method to study the impact of the second-generation involvement on the innovation investment of family firms. Based on the social emotional wealth theory and the perspective of legitimacy, and after considering the effect of the second-generation’s multiple goal orientation over time, this paper finds that: (1) Compared to the second-generation that has been involved for a long time, the second-generation that has been involved in the early stage is more inclined to improve the innovation input of family firms, that is, as the time of the second-generation involvement increases, the level of family business innovation investment will decrease. (2) The second-generation’s work experience outside the firm promotes family business innovation investment, that is, the outside work experience weakens the negative relationship between the second-generation involvement time and corporate innovation input. (3) The involvement of family members in TMT hinders family business innovation input, so the involvement of family members in TMT enhances the relationship between the second-generation involvement time and corporate innovation input. (4) The performance gap plays a certain role in the above-mentioned relationship. The performance gap limits the autonomy of the second-generation. Family firms will prefer risk aversion when facing the performance gap, which weakens the positive impact of the second-generation work experience on corporate innovation investment, and enhances the negative impact of the involvement level of TMT family members on corporate innovation investment. By considering the time effect of the second-generation involvement, this paper integrates the dynamic choice preferences of the second-generation goal paradox, and reconciles the inconsistent conclusions about the impact of the second-generation involvement on corporate innovation investment in previous studies. This paper also supplements the study of the second-generation individual-level goal paradox of family business, integrates the dynamic variability of the second-generation goal over time, and explains from a new perspective why the level of corporate innovation input will vary. The changes in the second-generation involvement time further enrich the successor decision-making research in the context of succession. This research provides ideas for succession training and planning for the succession period, helps to further understand the second-generation goals and decision-making preferences, and also provides enlightenment for external investors to predict family business behavior during the succession period.