Innovation In Family Firms Research Articles

Relational antecedents of innovation in family firms: The complexity role of non-family employees' commitment

A better understanding of the relational antecedents of innovation in family firms is central to explaining their long-term success and survival. Our study proposes an original model that shows that the internal social capital of non-family members does not always foster innovation directly as existing theory suggests, but through their organizational commitment. These results differ across the different dimensions of organizational commitment. Therefore, our study challenges existing thinking on commitment studies by offering theoretical grounding and empirical evidence that neglected dimensions of commitment have a crucial intermediate role in the relationship between internal social capital and innovation in family firms.

Organizational Ambidexterity in Family-Managed Firms: The Role of Family Involvement in Top Management

Organizational ambidexterity is vital for family firms’ long-term success, yet we still lack sufficient insights into the role of family involvement in top management in this context. Building on research on family firm innovation and diversity, we argue there are curvilinear relationships between family involvement in top management and exploration, exploitation, and organizational ambidexterity. We further propose that these (inverse) U-shaped relationships are affected by family CEOs’ family-centered noneconomic goals. Multisource data on 109 family-managed firms support most of our hypotheses and provide a nuanced understanding of how diversity within top management affects family firms’ innovative behavior.

Impact of wise leadership, workplace friendships on open innovation in family firms: a developing country perspective

PurposeThis study draws upon the hybrid approach of the resource-based view and social capital theory, and aims to develop and empirically validate a model that examines the relationship amongst wise leadership, workplace friendships and open innovation (OI) in family firms (FFs).Design/methodology/approachAn online survey was conducted to collect data from a sample of 381 firms from a developing country. Additionally, this study used AMOS software and structural equation model to empirically test the proposed hypotheses of the theoretical model.FindingsFindings show that wise leadership has a significant, positive indirect effect on stimulating OI in FFs via its influence on building workplace friendships and overcoming knowledge–strategic and collaboration–organisational challenges.Practical implicationsTo improve OI, top management teams of family businesses should encourage wise, intelligent, well-informed and strong leaders who drive change. Moreover, they should establish small group, “smart-world” networks for specialised innovation to facilitate friendship based on trust and competence, and develop the coordinating role of family leaders in these networks.Originality/valueThis study complements and advances previous research on OI in many ways. Firstly, the current study proposes a conceptual model that demonstrates the interrelationships amongst the main variables in Iraqi FFs. Secondly, this research explores the crucial mediating role of workplace friendship, which capitalises on the principles of friendship in the context of the acquisition, accumulation and exchange of knowledge, thereby overcoming the challenges associated with innovation.

Innovation mediating and moderating internationalization in family and non-family businesses: embeddedness in Egypt, Madagascar, Morocco and Turkey

Purpose of the paper: According to most previous research, family businesses tend to internationalize less than non-family businesses. However, previous research has been conducted mainly in developed countries, where strong institutions support non-family businesses more than family businesses. Conversely, in developing countries with weak institutions, family businesses may conceivably have a comparative advantage for internationalization, especially if they are innovative. This paper focuses on how innovation may mediate and moderate the effect of governance upon internationalization in the form of exporting, as this dynamic is embedded in developing societies with weak institutions. Methodology: The research method is quantitative data analysis. Our account is based on a representative sample of 4,004 family and non-family businesses in Egypt, Madagascar, Morocco, and Turkey, surveyed for the Global Entrepreneurship Monitor. Findings: Analyses show that governance hardly affects innovativeness, but affects internationalization, in that exporting is especially high for family businesses in Morocco. Moreover, innovativeness boosts exporting in family business more than in non-family business. Furthermore, the comparative advantage of family businesses is larger in Morocco than in Egypt, Madagascar, and Turkey. Research limits: Although an essential feature of our research design is based on a comparative approach, rather than the typical single-country studies, we compared four similar societies in developing countries with weak institutions. Therefore, a significant limitation is that our findings concerning the internationalization of family businesses should not be generalized to all kinds of societies. Moreover, due to the small number of countries (four developing countries), it is statistically impossible to test the effects of the macro-institutional factors affecting family firms exporting. Therefore, we can only measure country contexts' overall impact without elaborating effects of specific institutional factors enhancing or hampering the internationalization process. Practical implications: The practical implication is relevant for family firms' policies to know that innovation in family firms is not a waste of investment, but innovation especially can boost exporting in family business more than in non-family firms, thereby enhancing the economic performance of family firms. Originality of the paper: These results contribute to understanding internationalization in family businesses as shaped by innovation and as embedded in society's context.

Innovation in Family Firms: The Relative Effects of Wealth Concentration Versus Family-Centered Goals

Drawing on agency and behavioral perspectives, we disentangle two critical determinants of innovation strategies among family firms, namely, the family’s wealth concentration (WC) in its business and the family’s emphasis on family-centered goals (FCGs). Our results from a survey of Australian family firms show opposite and completely independent effects of WC and family-centered noneconomic goals on family firms’ innovation strategies. While higher WC is negatively associated with firm innovation, a greater emphasis placed on family-centered noneconomic goals has a positive impact, which seems to be the key determinant of innovation strategies in family firms.

Innovation mediating and moderating internationalization in family and non-family businesses: embeddedness in Egypt, Madagascar, Morocco and Turkey

Purpose of the paper: According to most previous research, family businesses tend to internationalize less than non-family businesses. However, previous research has been conducted mainly in developed countries, where strong institutions support non-family businesses more than family businesses. Conversely, in developing countries with weak institutions, family businesses may conceivably have a comparative advantage for internationalization, especially if they are innovative. This paper focuses on how innovation may mediate and moderate the effect of governance upon internationalization in the form of exporting, as this dynamic is embedded in developing societies with weak institutions. Methodology: The research method is quantitative data analysis. Our account is based on a representative sample of 4,004 family and non-family businesses in Egypt, Madagascar, Morocco, and Turkey, surveyed for the Global Entrepreneurship Monitor. Findings: Analyses show that governance hardly affects innovativeness, but affects internationalization, in that exporting is especially high for family businesses in Morocco. Moreover, innovativeness boosts exporting in family business more than in non-family business. Furthermore, the comparative advantage of family businesses is larger in Morocco than in Egypt, Madagascar, and Turkey. Research limits: Although an essential feature of our research design is based on a comparative approach, rather than the typical single-country studies, we compared four similar societies in developing countries with weak institutions. Therefore, a significant limitation is that our findings concerning the internationalization of family businesses should not be generalized to all kinds of societies. Moreover, due to the small number of countries (four developing countries), it is statistically impossible to test the effects of the macro-institutional factors affecting family firms exporting. Therefore, we can only measure country contexts' overall impact without elaborating effects of specific institutional factors enhancing or hampering the internationalization process. Practical implications: The practical implication is relevant for family firms' policies to know that innovation in family firms is not a waste of investment, but innovation especially can boost exporting in family business more than in non-family firms, thereby enhancing the economic performance of family firms. Originality of the paper: These results contribute to understanding internationalization in family businesses as shaped by innovation and as embedded in society's context.

Business Model Innovation in Family Firms: Untangling the Impact of Socioemotional Wealth

Socioemotional wealth (SEW) has been introduced as an important concept to account for the particularities of family firms and as an antecedent to innovation activities. However, little research attention has so far been given to the potentially distinctive effects of its underlying di-mensions and on how it fosters broader forms of innovation (e.g., of an entire business model). We address these research opportunities through a deductive study of 414 central European Companies and find that the five dimensions of SEW not only have very different effects but that their impact on business model innovation is also substantially different from what has been previously found for other forms of innovation. This allows us to contribute to family firm and business model innovation research and provide interesting insights for practitioners.

Does external R&D matter for family firm innovation? Evidence from the Italian manufacturing industry

This article focuses on the relationship between external R&D and firm innovation output. Using a sample of Italian manufacturing firms over the period 2007–2009, we estimate the effect of R&D collaboration with the aim to detect differences between family and non-family firms. The study shows that the R&D acquired from external sources has a positive impact on innovative sales, especially for family firms. This result holds when using either the extensive or the intensive margins of R&D collaboration, thereby suggesting that family companies have a greater capacity to translate external R&D into tangible economic benefits. We also find that family firms benefit from the diversity of R&D collaboration.

Innovation heterogeneity in family firms: Evidence from the date industry in Saudi Arabia

Researchers have argued that family firm innovation is paradoxical in nature, in that family firms often display less innovation than their nonfamily counterparts, yet they are able to be more innovative. The aim of this article is to unpack this paradox by exploring how differences in family firms’ ability (discretion and resources) and willingness (economic and noneconomic) affect their innovation activities. We adopt a qualitative, interpretive methodology based on four case studies of Saudi family firms operating in the indigenous date industry. Our findings emphasize the importance of having all four sources of ability and willingness in order for innovation to occur and how, when the new generation enters the business, the family firm’s innovation posture changes to either ‘lagging’ or ‘reviving’. By exploring innovation in the date sector in Saudi Arabia, we contribute to the ability–willingness paradox by distinguishing between the different sources of ability and willingness and add to an emerging narrative that acknowledges the integration of past knowledge with new innovative practices as an important and unique mechanism by which family firms can harness innovation.

Introduction to the Special Issue

Introduction to the Special Issue

Entrepreneurial orientation and the role of the context. The case of the firm “Sa Panada Srl”

PurposeThe paper aims to analyse the case of “Sa Panada srl”, a tiny Sardinian family firm, to provide intriguing insights for the study of entrepreneurial orientation in a context that is anchored in an apparent and hostile past.Design/methodology/approachAn exploratory approach is used to analyse a single-case study through a narrative approach. Data were analysed through the hermeneutic trio consisting of three phases: (1) explication – contextualisation, reconstruction and synthesis of the history; (2) explanation – identification, description and understanding of the meaning of the narrative; and (3) exploration – discussion and identification of theoretical and practical implications.FindingsThe study introduces novel best practices that help enhance entrepreneurial orientation in a difficult setting based on change reluctance and past anchored culture.Research limitations/implicationsTheoretically, the study contributes to the literature on entrepreneurial orientation, internationalisation and innovativeness of family firms embedded in a hostile context. The main drawback of the study is its explorative analysis of a single case.Practical implicationsFor practitioners, the research proposes the case study as a best practice able to inspire successful resilient behaviour and decisions for other firms that experience daily challenges.Originality/valueThe study elucidates the relevance of individual factors of family owners as endogenous elements that can balance contextual obstacles with ambitions of growth and development.

External knowledge sourcing and innovation in family firms

PurposeThis study aims to investigate the external knowledge search behaviors in terms of search breadth and search depth in family firms and the resultant product innovation in Indian context. The authors theorize the mediating role of absorptive capacity (potential and realized absorptive capacity) between knowledge sourcing from external sources and product innovation. Further, the authors examine the moderating role of crucial internal social capital of the family firm in enhancing the use of external knowledge for firm innovation activities.Design/methodology/approachThe study uses a quantitative research design taking single informant for collection of data from 151 family small and medium enterprises in automotive sector in India. The authors use structural equation modeling to test hypothesized relationships.FindingsThe findings indicate that both search breadth and search depth of family firms are positively associated with product innovation in family firms. The authors also find evidence for partial mediating role of potential and realized absorptive capacity in the relationship between search breadth and innovation and search depth and innovation. The results show how family firms learning taking place while scanning external knowledge sources in terms of external absorptive capacity routines. Finally, the authors find that family firm internal social capital positively moderate the relationship between search breadth and depth, and product innovation.Practical implicationsFamily firms need to innovate to remain relevant in the long-run and as such development of superior capabilities is of great significance to them. Family firm managers must be open to external knowledge as such knowledge help them improve the firm level of innovation through absorptive capacity. Further, family firms must realize and act upon the importance of their social capital for the integration and utilization of acquired knowledge.Originality/valueThis paper is amongst a few papers that take dynamic capability views of innovation in family firms wherein the authors theorize how external search breadth and depth lead to the development of potential and realized absorptive capacity in family firms. The importance of family firm internal social capital as a strong integrating and knowledge sharing mechanism that helps family firms transform external knowledge into innovation is also highlighted.

Handling Innovation in Small Family Firms: The Role of Context

Innovation management in family firms is a paradoxical challenge. The constant tension between innovation and tradition confers to this topic a fascinating mystery area that calls to action scholarly efforts and further studies to underscore whether family firms are innovating or not. This debate becomes even more intriguing and interesting when family businesses are small-sized and embedded in local contexts strongly attached to traditions and cultures that inhibit change. Based on the curiosity of analyzing the innovation proclivity of small family firms rooted in such a context and building on previous studies that were focused on innovation in family run businesses, we deeply investigated two cases. Findings uncovered a twofold and opposite role of the context:  on the one hand, a constraint and, on the other hand, leverage of innovation. Interesting scholars and practical implications are discussed, and future studies are suggested.

The Effect of Family Involvement on Innovation Outcomes: The Moderating Role of Board Social Capital

Innovation is an essential and yet puzzling part of family firms’ strategic focus. While family firms are generally characterized as conservative regarding their research and development (R&D) activities, researchers have recently argued that family firms can still achieve innovation‐based competitive advantages. Seeking to understand the link between family influence and the outcomes of innovation, we suggest that it is necessary not only to observe the depth of family involvement, but also to differentiate between technological inventions and market innovations. We further posit that the board members’ social capital constitutes an important contingency for this link. We, therefore, investigate the relationship between family involvement and two different outcomes: the number of the firm’s inventions and the market relevance of innovations. Our analysis of S&P 500 firms comprises 1.85 million patents and manual evaluations of 1774 product announcements. The results of our estimations suggest that family involvement is negatively related to the number of inventions and positively related to the market relevance of innovations. They further show that internal and external board social capital moderate the relationship between family involvement and the number of inventions. This study adds to the discussion about family firm innovation by using socioemotional wealth to explain heterogeneity in innovation patterns and revealing that relational resources derived from board social capital are crucial boundary conditions for families’ influence on technological inventions. Taken together, it works toward a more holistic view of innovation in family‐influenced firms.

Does Knowing “Who Knows What” Matter for Family Firm Innovation? Insights From Transactive Memory System Theory

We extend transactive memory systems theory from psychology to examine the cognitive interdependence of family and nonfamily employees and its effects on family firm innovation. Using triadic data and dispersion modeling, we find that innovation is enhanced when family and nonfamily employees communicate and when they have a shared understanding of “who knows what”; however, we find unexpectedly that the communication effects differ for family and nonfamily employees, hindering the development of shared knowledge perceptions needed for enhanced innovation. We demonstrate the value in applying psychology-based research to family firm investigations and in investigating microfoundations of family firm innovation.

Post M&A innovation in family firms

PurposeThe paper empirically investigates how family firms appropriate acquired resources to become more innovative in the context of merger waves. It draws on resource-based view and the theory of first mover (dis)advantages to examine the implications of the timing of acquisitions on innovation in family firms.Design/methodology/approachThe paper uses a panel data set of Standard & Poor's (S&P) 500 manufacturing firms followed over a period of 31 years.FindingsThe study finds empirical support for the predictions that family firms are more able to utilize acquired resources better than nonfamily firms. Furthermore, targets acquired during the upswing of a merger wave are more valuable to family firms and associated with more innovation than for nonfamily firms.Originality/valueThe paper establishes that resources acquired during the upswing of a merger wave are more valuable, provide better resource synergies and impact innovation positively in family firms than nonfamily firms. Second, the paper makes an empirical contribution that family firms absorb external resources markedly differently and more efficiently than nonfamily firms. Third, the paper enhances a better understanding of the influence of family ownership on the relationship between acquisitions and innovation outputs.

Radical innovation in family firms: a systematic analysis and research agenda

PurposeInvestigation of family firm radical innovation is burgeoning but far less prevalent than studies of family firm innovation in general. Concurrently, studies repeatedly report that family firms exhibit mostly conservative and incremental innovation rather than more radical ones. This is unfortunate because without radical innovation, family firms risk a competency trap in which long-term competitiveness is lost to more innovative rivals. This situation has led to urgent calls among scholars to explicitly acknowledge the heterogeneity of family firm innovation and to understand the conditions for family firm radical innovation.Design/methodology/approachA systematic review of 51 papers categorized into four scholarly conversations build the foundation for a critical discussion of each line of inquiry.FindingsThe authors analyze 51 leading articles and identify four persistent theoretical positions: (1) RBV and capabilities, (2) agency and stewardship, (3) behavioral agency and socioemotional wealth, and (4) the ability and willingness paradox. The authors identify key research problems and research questions needing urgent scholarly and present a framework that captures their complementary and competing assumptions to enable rigorous future research.Originality/valueTo galvanize and spearhead future research efforts, this paper provides a critical analysis of our understanding of family firm radical innovation with a specific emphasis on the theoretical assumptions at the core of existing investigations and the eight most important research questions in need of answers.

How does family management affect innovation investment propensity? The key role of innovation impulses

We investigate the relationship between family management and innovation investment propensity in family firms through analyzing the effect of two innovation impulses: demand-pull and technology-push. Extending the technology-push/demand-pull framework to the context of family firms, and adopting a direct measure of firms’ innovation investment propensity, we test our hypotheses on a sample of 1093 Italian small and medium-sized family firms. Our results show that both the demand-pull and technology-push innovation impulses moderate the relationship between family management and the firms’ propensity to invest in innovation, reducing the negative effect exerted by family management on family firms’ innovation investment propensity. Moreover, our evidence shows that family firms’ innovation investments are more sensitive to the demand-pull than the technology-push impulse. Overall, our findings suggest to practitioners and policymakers that family firm innovation impulses are important contingencies that need to be taken into account when making innovation investment decisions.

When the Former CEO Stays on Board: The Role of the Predecessor’s Board Retention for Product Innovation in Family Firms

Understanding product innovation in family firms is an important research endeavor given the economic predominance of those firms, their idiosyncrasies, and the importance of constant renewal for those firms to achieve transgenerational survival. Recently, family firm research has highlighted the role of next‐generation chief executive officers (CEOs; i.e., successors) who are often seen as drivers for innovating a family firm’s products. However, prior research has typically neglected that predecessors, who are often portrayed as less willing to introduce product innovation, frequently remain involved postsuccession through occupying board positions and thus still substantially influence the decision‐making processes and outcomes of family firms, such as product innovation. As a result, our understanding of the role of predecessors and their postsuccession involvement in family firms’ product innovation remains unclear. Building on stakeholder salience theory and on insights from the literature on innovation and succession in family firms, we develop hypotheses about how and under which conditions the predecessor’s board retention affects product innovation in family firms after succession. Building on more than 200 family firm CEO succession cases in small‐ and medium‐sized, privately owned family firms, our results reveal that the predecessor’s board retention negatively affects product innovation. This negative effect is strengthened with increasing involvement of the predecessor in the successor selection process, and it is offset in the case of family succession. Our findings contribute to the emerging stream of research on family firm succession and product innovation and provide important implications for practice.

Structured literature review on organizational innovation in family business context

Over the past decade, research on innovation in family firms has shown incremental growth. Several scholars and practitioners across the globe have shown interest in this field, which has also enriched the current body of literature. Despite the growth in studies related to innovation, research lacks a comprehensive review of the past and present achievements. In our study, we tried to fulfill this gap with a focus on family and firms' influence on organizational innovation. Based on a systematic review of 30 plus journal articles, it presents an integrative picture of family firm innovation. Major research avenues have been discussed based on which areas of future research can be determined.