Firm-level innovation by Japanese family firms: Empirical analysis using multidimensional innovation measures

Keiichi Kubota and Hitoshi Takehara

Pacific-Basin Finance Journal, 2019, vol. 57, issue C

Abstract: This study investigates whether innovation activities conducted by family firms in Japan can be distinguished from those carried out by non-family firms. For this purpose, we choose a sample of listed family firms and investigate four firm-level innovation measures, namely R&D intensity, the number of patents, the quality of patents, and innovation efficiency, over a sample period of 2003 to 2012. We find that innovation output by family firms in Japan is lower than that of non-family firms, although innovation input is higher in family firms. The innovation of Japanese family firms, overall, is inefficient compared with non-family firms. Our cross-sectional regression analysis shows that family shareholding is positively associated with the innovation measures after controlling for several of the characteristics of firms. On the contrary, founder CEOs enhance R&D investment, although their presence is detrimental to both the number of patents and their quality. Descendant CEOs tend to adopt low-input/low-output innovation strategies. In sum, the innovative activities of Japanese family firms continually change to accomplish their sustainable growth.

Keywords: R&D expenditure; Patent information; Family ownership; Family control (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:57:y:2019:i:c:s0927538x16303146

DOI: 10.1016/j.pacfin.2018.05.012

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