The impact of technological innovation efficiency on firm growth

Abstract

Purpose The purpose of this paper is to offer new insights regarding an issue that has attracted the interest of multitude academics and practitioners in business management and family firm literature: technological innovation (TI). Specifically, this study brings new knowledge regarding both the impact of TI efficiency on firm growth and the moderating role of family involvement in management on such relationship. Design/methodology/approach The authors use a matched-pairs design and an ordinary least squares regression analysis to examine a sample of 152 Spanish manufacturing firms. Findings First, the authors show that firms obtaining higher TI efficiency are also those that achieve superior growth. Second, the authors reveal that as family involvement in management increases, the positive effect that TI efficiency exerts on firm growth is strengthened. Practical implications This study suggests that family managers should essentially consider various aspects such as tacit knowledge, social capital and long-standing collaborations with stakeholders to reinforce the relationship between TI efficiency and firm growth. Originality/value To the best of the authors’ knowledge, this is the first study that analyses the effect of TI efficiency on firm growth, as well as, when and to what extent family involvement in management influences the TI efficiency–growth relationship. Thus, this paper provides a deeper understanding of the importance that family managers could have on firm growth deriving from TI efficiency.

Examining the Impact of Innovation Forms on Sustainable Economic Performance: The Influence of Family Management

“…Therefore, it can be stated that H5 is partially supported. To show a more accurate view of the moderating effect of family management on the process innovation and sustainable economic performance relationship, Figure 2 shows the interaction effect by estimating the predicted values of sustainable economic performance under different conditions, that is, 0 and 1 values for process innovation and 0 and 1 values for family management, making the different effects visible [10]. This figure reveals that in the absence of process innovations, family-managed firms obtain a slightly higher predicted long-term performance than their non-family counterparts.…”

“…Additionally, the choice of the manufacturing industry is especially appropriate for the purpose of this study, as the high degree of obsolescence that these firms often experience in their products leads them to rely on innovation in order to conserve their degree of competitiveness in the long-term [10,83]. In fact, this data source is very reliable, and its utilization in prior innovation, performance, and family firm studies in the Spanish landscape corroborates it [28,79,84].…”

“…In this vein, many studies indicate that family firms present a special linkage between their management, ownership and governance structures [70,71] that favors the development of specific family firm resources and the entrenchment of sustainable competitive advantages, making them appealing organizational forms for analyzing innovation and firm performance phenomena [20,72]. Particularly, the family presence in the firm management strengthens the unique set of family goals and enables family members to effectively engage in the execution of businesses' decisions, strategies and activities [73,74], which influences how different innovation forms are managed and implemented [10,54], and therefore, the singular way in which family members manage their firms may have a significant impact on the achievement of long-term performance [19].…”

“…Sustainable economic performance, also known as long-term performance, involves, among other issues, preserving and expanding economic growth, creating shareholder value, fostering customer relationships or improving the quality of products and services [4]. Nevertheless, the measurement of sustainable economic performance is a very difficult and sophisticated task [6], since firm performance is a multidimensional concept encompassing a complex diversity of performance indicators that are not necessarily related [9,10] and might lead to diverse results [10,11]. Thus, this study is focused on one of the classical dimensions of performance, i.e., profitability, operationalized through the return on asset ratio (ROA), which is considered an appropriate financial indicator of sustainable performance [4].…”

“…On the other hand, some researchers [4] also point out that sustainable economic performance is contingent upon a set of managerial (e.g., risk management), operational (e.g., reduction of inputs) or economic (e.g., innovation) factors, that is, variables that contribute to the achievement of firms' long-term performance. Concretely, innovation has been identified as one of the most valuable sources of sustainable competitive advantages [12,13], enabling firms to grow and evolve even faster, survive and endure over time in rapidly changing environments, be more efficient in managing firm resources and ultimately, achieve superior performance outcomes [10,14]. However, innovation also constitutes a multifaceted phenomenon and therefore, its influence on long-term performance cannot be evaluated as a sole variable [15,16].…”