Determinants of the Economic Performance of Portuguese Family Firms: Is Innovation Relevant?

Aurora A. C. Teixeira () and Sofia F. Correia ()
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Aurora A. C. Teixeira: University of Porto
Sofia F. Correia: University of Porto

A chapter in Entrepreneurship and Family Business Vitality, 2020, pp 297-326 from Springer

Abstract: Abstract Family firms contribute substantially to the economy of a country. Thus, it is surprising that few studies have considered these firms as an object of analysis, especially regarding the importance of innovation to their economic performance. In an attempt to fill this gap, this paper assesses the importance of innovation and technological capabilities in the performance of family firms in Portugal. Based on a sample comprising 230 firms, 110 of which are family-owned, and on econometric estimation methods, we show that internal factors are more relevant in explaining family firms’ economic performance than contextual factors. Family firms run by CEOs with a degree in engineering or with CEOs and management teams with more international experience tend, on average, to present higher levels of productivity. Additionally, the firms that are more experienced in business and more internationalized are also more productive generally. Notwithstanding family firms being less intensive in R&D than nonfamily ones, innovation is one of the most critical determinants for the performance of the former. Besides the relevance of technological- and innovation-related skills mirrored by investment in R&D, the result of innovation, reflected in the successful introduction of innovations (in marketing and combined), emerges as highly relevant statistically, playing a decisive role in the economic performance of family firms. Family firms that are located in economically less developed regions tend, on average, to present higher productivity levels. This seems to indicate that family firms may constitute a driver of regional convergence regarding dynamics and development.

Keywords: Family firms; Innovation; Technological skills; Economic performance; Internationalization (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:spr:seschp:978-3-030-15526-1_15

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DOI: 10.1007/978-3-030-15526-1_15

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