SME family business innovation: exploring new combinations

Abstract

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 Adoption in Mexican Small Family Firms

“…Additionally, there is theoretical and empirical evidence in the current literature of business and management sciences that establishes the presence of significant differences in the adoption of innovation activities between family businesses and those who are not family-owned (Kraus et al, 2012) and these differences are emphasized even more when a comparison is made between small family businesses and bigger family businesses (Brines et al, 2013).This is why Sharma and Salvato (2011: 1200) made the following question: "What factors are the ones that influence more in family businesses so they adopt and implement as soon as possible the innovation activities?" Several researchers, scholars and professionals have tried to answer this question by means of the enterprise orientation (Nordqvist, Habbershon, & Melin, 2008;Zellweger, Muhlebach & Sieger, 2010), of the resources and skills that family business have in order to create or inhibit entrepreneurism and innovation activities (Sirmon & Hitt, 2003) and of the effects of the notion of family business that managers or owners have about them (Dyer, 2006;Habbershon, 2006).…”

“…This is because of the same characteristics that this type of enterprises has such as the long-term orientation of the control from the family, the scarce rotation of staff and managers, the ease of making decisions from managers or owners and the replacement of executives (Patel & Fiet, 2011). This allows family businesses, especially the small ones, to create a working environment and dynamic that favors the adoption of innovation activities (Brines et al, 2013).…”

“…In this regard, some of the investigations published in the literature that link small family businesses and innovation activities have been able to do it from the perspective of external resources (Sirmon & Hitt, 2003) or from the perspective of the agency (Morck & Yeung, 2003;Choi, Lee & Willliams, 2011) but there are not studies that have considered the perspective of the adoption of innovation activities. That is why it is necessary to increase the theoretical and empirical evidence of the adoption of innovation activities in small family businesses from this perspective (Laforet, 2013;Lodh et al, 2013;Brines, Shepherd & Woods, 2013). Therefore, the main contribution of this empirical research is the analysis and discussion of the adoption of innovation activities in small family businesses in a country with an emerging country, which is the case of Mexico, as it suggests Laforet (2013), Lodh et al (2014) and Brines et al (2013).…”

“…That is why it is necessary to increase the theoretical and empirical evidence of the adoption of innovation activities in small family businesses from this perspective (Laforet, 2013;Lodh et al, 2013;Brines, Shepherd & Woods, 2013). Therefore, the main contribution of this empirical research is the analysis and discussion of the adoption of innovation activities in small family businesses in a country with an emerging country, which is the case of Mexico, as it suggests Laforet (2013), Lodh et al (2014) and Brines et al (2013).…”

The influence of open innovation practices on business performance in Mexican family and non-family SMEs

“…Innovation in family and non-family SME´s may be a key growth driver, as these companies are also a significant part of the global economy (Sraer & Thesmar, 2007). Although in recent literature there are a number of studies that have previously investigated innovation in family businesses (McAdam, Reid, & Mitchell, 2010;Brines, Shepherd, & Woods, 2013;Laforet, 2016;Steeger & Hoffmann, 2016;Rondi, De Massisa, & Kotlarb, 2018), open innovation in family firms (Lambrechts et al, 2017;Park & Kwon, 2018) and open innovation and business performance (Kuang-Peng & Chou, 2013;Wang, Chang, & Shen, 2015;Greco, Grimaldi, & Cricelli, 2016;Lazzarotti, Bengtsson, Manzini, Pellegrini, & Rippa, 2017;Wang, 2018), there are no studies on the influence of open innovation on business performance in family and non-family firms in an emergent economy like Mexico. For this reason, it is considered that more research is needed to empirically ground the picture of this influence, thereby contributing to business growth and stability.…”