Innovation in family firms: an empirical analysis linking organizational and managerial innovation to corporate success

Abstract

Family firms play a significant role in national economies worldwide, accounting e.g. for 85% of all enterprises in the OECD countries as well as for the majority of companies in Central Europe. Previous scholarly research on family firms has mostly focused on the question of how they differ from public corporations, describing family firms as being more conservative, less risk-raking, or reluctant to grow-in sum, as being less entrepreneurial than their non-family counterparts. Similarly, the existing literature often criticizes the lack of innovation in family firms. But since innovation has long been discovered as one of the key drivers to company success, it is surprising that its role in family firms has been mostly neglected in existing academic research so far. The aim of this article is therefore to study the role of (managerial and organizational) innovation in family firms compared to non-family firms on the basis of an empirical survey of 533 companies from Finland, using structural equation modelling (MPlus) for the statistical analyses.

Management innovation, pro-innovation organisational culture and enterprise performance: testing the mediation effect

“…Heij et al (2012) present similar results, confirming the existence of the relationships between management innovation and organizational performancethey are mediated by exploratory and exploitative product and service innovations. Kraus et al (2012), on the other hand, partly support the hypothesis that management innovation has a positive impact on corporate success and that the positive relationship between management innovation and corporate success is higher in non-family businesses (compared to family-owned firms).…”

“…The effect of mediation between the structural dimension and the ICT dimension with enterprise performance was not detected. Table 6 The results of testing mediation with the use of Cohen and Cohen's method (Kraus et al 2012), but we should also note that some studies on the links between MI and organisational performance indicate the mediating role that different factors play in these relationships. In their study, Walker et al (2011) pointed to the variable of performance management, while Heij et al (2012) identified a mediating variable as exploratory and exploitative product and service innovations.…”

“…The positive relationship between organisational and management innovation and a firm's performance and success is also demonstrated by Kraus et al (2012), Gallego et al (2012), and others (Evangelista and Vezzani 2010). On the other hand, literature studies show that some surveys on the relationship between innovation and performance revealed no such connections (Hilami et al 2010).…”

Tweaking the entrepreneurial orientation–performance relationship in family firms: the effect of control mechanisms and family-related goals

“…Their business behavior is influenced by the goals to protect the longevity of the family firm ) and the will to pass on the firm to the next generation for their own and the family's interest (Berrone et al 2012). In comparison to nonfamily firms, studies demonstrate that family firms show similar attitudes for other EO dimensions and their positive effect on financial performance, with regards to Innovativeness (Kellermanns et al 2012a;Bergfeld and Weber 2011;Kraus et al 2012b), Proactiveness (De Massis et al 2014;Zellweger and Sieger 2012;Nordqvist et al 2008) and Autonomy (Gómez-Mejía et al 2007;Habbershon and Pistrui 2002). However, research findings also indicate that EO dimensions in family firms might have to be refined, to external and internal components of Innovativeness and Autonomy (Nordqvist et al 2008;Zellweger and Sieger 2012), to different components or definitions of Risk-Taking (Gómez-Mejía et al 2007;Zellweger and Sieger 2012;Zahra 2005), with regards to the applicability of Competitive Aggressiveness (Nordqvist and Melin 2010;Lumpkin et al 2010;Kallmuenzer and Peters 2017) or depending on the age/generational context for Proactiveness (De Massis et al 2014;Martin and Lumpkin 2003).…”

Disentangling antecedents and performance effects of family SME innovation: A knowledge-based perspective

“…Management innovation is another major factor of influence on business performance, which despite growing academic attention is still an under-researched area Kraus et al 2012a). Contributing to family business and innovation research, this study investigates the effect of internal and external factors on a firm's innovation (Walker et al 2015;De Massis et al 2013).…”