Innovation In Family Businesses Research Articles

Resources and Innovation in Family Businesses: The Janus-Face of Socioemotional Preferences

Family business socio-emotional preferences are often Janus-faced. Some strive to create a strong business they can pass on to offspring by building innovation-promoting resources such as human, relational, and financial capital. Other family firms cater to family desires for unqualified nepotism, altruism towards undeserving kin, and appropriation of firm assets to fulfill parochial desires that erode these resources. This article explores how such preferences, together with their impact on resources and the innovation demands of their markets, shape the approach to innovation.

Social capital in entrepreneurial family businesses: the role of trust

Purpose– The purpose of this paper is to provide empirical insights to understanding trust as a relational form of social capital, and its effects on entrepreneurial processes, in small- and medium-sized family businesses.Design/methodology/approach– This paper adopts a qualitative case-study approach, with data from fieldwork interviews, observations, and secondary sources analysed by using interpretative methods.Findings– Although multiple types of trust exist concurrently in small- and medium-sized Chinese family businesses, it is interpersonal trust on the basis of goodwill and competence that prevails, while contractual trust is weak and marginal. Three patterns of trusting relationships are identified, each of which has both positive and negative effects on entrepreneurship and innovation in family businesses. There is a potential “dark side” of trust, which incurs extra cost and commitment to small- and medium-sized family businesses in their entrepreneurial processes.Research limitations/implications– Future research with larger sample sizes is suggested to generalise the insights, by using both qualitative and quantitative methods. More empirical work is needed to further clarify the antecedents of trust as a social capital and the potential “dark side” of trust in small- and medium-sized family businesses, particularly across generations.Practical implications– Family business owner-managers should try to avoid relying on a single type of trust, which may incur extra costs to the entrepreneurial processes. They need to better understand why they trust certain actors in their business and social networks before assigning resources to specific business activities. Policy makers are suggested to recognise the “benefits” of the traditionally family-oriented values and that kinship-based trust is also a relational form of social capital and can produce entrepreneurial outcomes.Originality/value– The paper critically reviews existing literature on social capital, trust, entrepreneurship, and family business at their point of intersection and identifies gaps and oversights. Drawing on case studies from China, the paper explores different patterns in which trust develops in second-generation small- and medium-sized Chinese family businesses and their varying effects on entrepreneurship.

Future research directions for collective entrepreneurship in developing countries: a small and medium-sized enterprise perspective

Most of the current research on entrepreneurship is focused on developed countries and less has been written about the changing market conditions of developing countries. The aim of this paper is to focus on how small and medium-sized enterprises (SMEs) in developing countries are encouraging an entrepreneurial spirit in their business environment. By highlighting the importance of fostering collaborative entrepreneurship in developing countries a number of future research suggestions are espoused. These research suggestions include the role of individual entrepreneurship factors, culture, government intervention, the informal or grey sector, family business, historical development, demographic differences and technological innovation in developing countries in Africa, South America, the Middle East and the South Pacific. The findings of this paper are useful for business, policy makers and entrepreneurs interested in creating a collaborative entrepreneurial climate in developing countries.

SME family business innovation: exploring new combinations

Purpose – Continued research around innovation within small- and medium-sized enterprises (SME) family businesses is needed to better understand the influence of specific resources and capabilities that might promote and/or constrain entrepreneurial activities. The purpose of this paper is to develop an organising framework investigating SME family business innovation drawing on a Schumpeterian understanding of innovation as the introduction of new combinations. Design/methodology/approach – Four guiding principles are developed and applied to an illustrative case study of an entrepreneurial family business that highlights the usefulness of complexity thinking for understanding innovation. Findings – NZ Sock provides a rich illustrative case study to highlight how principles of complexity thinking along with Schumpeterian notions of innovation can usefully inform the authors’ understanding of entrepreneurial SME family businesses. The proposed guiding principles offered are borne out in application to the illustrative case example. Research limitations/implications – The findings suggest that complexity thinking and a Schumpeterian lens can usefully inform and extend the authors’ understanding of innovation within entrepreneurial SME family businesses. Further research would benefit from exploring the guiding principles proposed in other entrepreneurial SME family businesses to further substantiate this field of inquiry. Practical implications – Principles of complexity thinking may provide additional understanding and insight for SME family business members needing to innovate and adapt to ever-changing operating environments. Originality/value – Innovation is critical to the long-term survival and success of such firms; yet, to date little theoretical contribution and research has been offered in the field of innovation within the context of SME family businesses. Complex adaptive systems provide a lens from which to understand such businesses and that that a complexity framework helpfully allows attention to be given to such phenomena as emergence, adaptability and combinations through which innovation outcomes and processes may be understood. This paper offers four guiding principles that can be further tested and refined.

Innovation characteristics of young and old family‐owned businesses

PurposeThe purpose of this study is to examine characteristics and factors affecting innovation in young and old family‐owned businesses. The research focuses on three important factors to innovation: organisation type, age and size; covering gaps in existing literature.Design/methodology/approachA postal survey of 500 small family‐owned businesses across sectors in the UK is conducted. The study uses regression analysis to test effects of environment, innovation strategy, family culture, family involvement, owners' background and learning on innovation in young and old family businesses as well as innovation effect on their financial performance.FindingsThe findings suggest social capital theory to be extended to include non‐family employees in the innovation process of family firms, and formal learning has a positive impact on young firms' innovation. Market condition, industry sector, business goal and long‐term orientation positively affect family firm innovation.Originality/valueThis paper makes valuable contributions to the understanding of theory and practices of innovation in family businesses. It has policy implications.

Change through innovation in family businesses: evidence from an Italian sample

Research on the linkages between family firms, innovation and change is scant and lacking empirical investigation. In parallel the incessantly changing business environment and its consequent unpredictability and strategic disorientation, demand for radical organisational changes, without however signifying their nature. This research investigates the innovative capacity of family businesses and the degree and manner to which innovation can lead to change or even be the change needed in the context of strategic reorientation. The research investigates innovation with reference to the resource perspective, which is measured in terms of the human, social and marketing capitals. The findings highlight the innovative strength of family businesses and suggest that innovation is indeed not simply the means of strategic change, but, in its deeper sense, the strategic change itself. Moreover, innovation and change, as a unified goal, are required to be dynamic and constant, as opposed to static and instant.

The relationship between innovation, knowledge, and performance in family and non-family firms: an analysis of SMEs

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.

The family social capital impact in practices of learning, change and innovation in entrepreneurial family businesses

Family businesses are found in the economies all over the world; they constitute a significant number of enterprises. Recent studies understand their special features from the perspective of social capital, differentiating the approach usually used in studies in Brazil. Therefore, we add a set of variables that are involved in this type of business, allowing the association of family business theme with the entrepreneurship. This phenomenon involves learning, innovation and change in both aspects of the organizational and social collectivity ambit. Thus, it is argued that the family’s social capital present the relationship between the members of a family and those with the community, and influences the practices of innovation, learning and change in the family businesses. This vision configured these companies as entrepreneurs. The objective of this study is to develop a model to understand the social family capital phenomenon dimension, which influences the process of learning, innovation and organizational change in family business. The assumptions were established by the family social capital present in a family business, linking it as an independent variable in relation to learning, change and innovation. Family businesses that develop the family social capital are used to facilitate organizational development characterized as entrepreneurial family businesses.

Innovation in family and non-family businesses: a resource perspective

This article expands our understanding regarding the differences in innovative behaviour between family and non-family firms. To detect real rather than sample differences between independent family and non-family manufacturing companies in Spain, we use a matched sample methodology with data from the European Manufacturing Survey – a European cross-national survey launched in 11 countries and focused on the manufacturing sector. A Mann-Whitney U non-parametric test revealed that six out of seven measures were statistically significant between the two matched groups of companies. We found differences between family and non-family firms with regard to the role of human, social and marketing capital for innovation. These findings are of interest because some of them run contrary to conventional thinking that family firms are less innovative than non-family firms.

Salient stakeholder voices: Family business and green innovation adoption

AbstractOne striking finding from recent natural environmental management research is that family firms are more likely to engage in environmentally friendly practices. However, the source of such difference is less clear. The primary objective of our research is to investigate if family firms react to stakeholder pressures differently when making natural environmental management decisions. We survey 235 manufacturing firms from the chemical, and the electronic and information technology industries in Taiwan to test our hypotheses. The results of regression analysis show that family firms pay much more attention to their internal stakeholders than non-family firms. This finding complements the current discussions on family business uniqueness. It also contributes to provide a more comprehensive framework of stakeholder salience.

Salient stakeholder voices: Family business and green innovation adoption

AbstractOne striking finding from recent natural environmental management research is that family firms are more likely to engage in environmentally friendly practices. However, the source of such difference is less clear. The primary objective of our research is to investigate if family firms react to stakeholder pressures differently when making natural environmental management decisions. We survey 235 manufacturing firms from the chemical, and the electronic and information technology industries in Taiwan to test our hypotheses. The results of regression analysis show that family firms pay much more attention to their internal stakeholders than non-family firms. This finding complements the current discussions on family business uniqueness. It also contributes to provide a more comprehensive framework of stakeholder salience.