Doing More with Less: Innovation Input and Output in Family Firms

Patricio Duran, Nadine Kammerlander, Marc van Essen and Thomas Zellweger
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Patricio Duran: Universidad Adolfo Ibáñez [Santiago]
Nadine Kammerlander: WHU-Otto Beisheim School of Management - WHU-Otto Beisheim School of Management
Marc van Essen: HSG - University of St.Gallen
Thomas Zellweger: HSG - University of St.Gallen

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Abstract: Family firms are often portrayed as an important yet conservative form of organization that is reluctant to invest in innovation; however, simultaneously, evidence has shown that family firms are flourishing and in fact constitute many of the world's most innovative firms. Our study contributes to disentangling this puzzling effect. We argue that family firms—owing to the family's high level of control over the firm, wealth concentration, and importance of nonfinancial goals—invest less in innovation but have an increased conversion rate of innovation input into output and, ultimately, a higher innovation output than nonfamily firms. Empirical evidence from a meta-analysis based on 108 primary studies from 42 countries supports our hypotheses. We further argue and empirically show that the observed effects are even stronger when the CEO of the family firm is a later-generation family member. However, when the CEO of the family firm is the firm's founder, innovation input is higher and, contrary to our initial expectations, innovation output is lower than that in other firms. We further show that the family firm–innovation input–output relationships depend on country-level factors; namely, the level of minority shareholder protection and the education level of the workforce in the country.

Keywords: family firm; innovation input; innovation output; institutions; leadership; meta-analysis; R&D (search for similar items in EconPapers)
Date: 2016-08-01
Note: View the original document on HAL open archive server: https://hal.science/hal-02276703v1
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Citations: View citations in EconPapers (224)

Published in Academy of Management Journal, 2016, 59 (4), 1224-1264 p. ⟨10.5465/amj.2014.0424⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02276703

DOI: 10.5465/amj.2014.0424

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