Introduction and position in the current literature
Family firms represent a central organizational form in most economies around the world. Yet, compared to large publicly-traded companies, little is known about the strengths and weaknesses of this organizational form. The purpose of this research project is to examine the impact of family ownership on the organizational innovation process. Given the prevalence of family firms, and the importance of innovation for economic growth, further research on the innovation strengths and weaknesses of this organizational form is warranted.
Most previous studies on innovation in family firms focused on R&D spending (because of data availability) and found a negative association between family ownership and R&D spending (e.g., Chrisman & Patel, 2012, AMJ). In this project we move beyond formal R&D investments, and examine the interrelationship between family ownership and a firm’s innovation-supportive work climate. Further, we will explore how these weaknesses in one innovation domain (R&D spending), and potential strengths in another (innovation-supportive work climate), ultimately affect innovation outputs in the form of product and process innovations.
Research questions & hypotheses
- Do family firms have advantages in terms of an innovation-supportive work climate?
- What are the sources of such a climate in terms of organizational goals (e.g., expressing family values, focus on long-term continuity of the firm) and HRM policies (e.g., caring employment relationships, direct encouragement of innovation)?
- Do advantages with respect to such a work climate (partly) compensate disadvantages in R&D spending? Does it enable family firms to utilize their R&D investments more effectively? What is the overall effect of family ownership on technological innovation outputs?
- Besides R&D spending and work climate, what other innovation domains (e.g., open innovation) may be influenced by family ownership?
We will collect data both at the employee level (personal work climate experience, creativity, etc.) and the firm level (organizational priorities and policies, innovation outputs, etc.). As for the employee level, we will collect primary survey data; as for the firm level, we will rely both on primary survey data as well as existing secondary sources (e.g., CIS data). Statistical techniques most likely to be applied will be structural equation modeling and conditional process modeling.
Results & follow-ups
This study builds on the idea that family businesses perform particularly well in the domain of exploitative innovations and explores a possible source of this strength, namely their employees’ spontaneous involvement in informal innovation activity. Specifically, we develop a mediation model on the interrelationship between family business employment and employees’ innovative work involvement. Analyses are based on a sample of 893 Belgian employees using structural equation modeling. Results suggest that family business employment is positively associated with employees’ innovative work involvement, and that part of this relationship can be attributed to their heightened perceptions of organizational support and work motivation.