Disentangling the family firm’s innovation process: A systematic review

Journal of Family Business Strategy 7 (2016) 185–201

Contents lists available at ScienceDirect

Journal of Family Business Strategy journal homepage: www.elsevier.com/locate/jfbs

Disentangling the family firm’s innovation process: A systematic review Irina Röd WU Vienna University of Economics and Business, Research Institute for Family Business, Welthandelsplatz 1, A-1020 Vienna, Austria

A R T I C L E I N F O

A B S T R A C T

Keywords: Family firms Innovation Innovation process Family system Literature review

Previous reviews have advanced our knowledge of the differences in innovation in family firms compared to non-family firms. For example, family firms invest less in innovation, but this does not necessarily mean that they are less innovative. Nonetheless, we are still lacking a comprehensive overview of the family firm's innovation process, and how the family accounts for distinctiveness in innovation inputs, activities, and outputs. To address this gap, the present systematic review article analyzed 78 peerreviewed journal articles on innovation in family businesses. Subsequently, a conceptual framework is developed that provides a holistic view of the multi-staged innovation process by incorporating the family system as an influencing context variable. Building on the concept of familiness, the framework demonstrates how family factors, based in the family system, affect the various stages of the family firm’s innovation process. Whether the family leads to an advantage or disadvantage for the innovation behavior of the business depends on contextual factors (e.g., performance hazards, kind of family involvement, and generational effects) and first and foremost on the familiness of the firm. The insights of this review are used to develop suggestions for future research. ã 2016 Elsevier Ltd. All rights reserved.

1. Introduction Innovation in family businesses as a research field is gaining increasing momentum as innovation is recognized as one of the main strategic instruments for ensuring economic prosperity (Porter, 1980) and the survival of the firm (Schumpeter, 1934). The need for innovation seems to be even greater in family businesses, with the vision for continuity and transgenerational succession being one of their main characteristics (Chua, Chrisman, & Sharma, 1999). While some of the typical characteristics of family businesses are considered favorable for innovation, others seem to have the opposite effect. De Massis, Frattini, and Lichtenthaler (2013) offer an overview of the literature on innovation in family firms, with particular focus on technological innovation. The authors show that family involvement has an influence on innovation input, activity, and output. The majority of studies identified compare family firms with non-family firms, with the former typically viewed as less innovative than the latter. The ambiguity surrounding the question as to whether family firms are more or less innovative than nonfamily firms has been addressed by Duran, Kammerlander, Van

E-mail addresses: [email protected], [email protected] (I. Röd). http://dx.doi.org/10.1016/j.jfbs.2016.08.004 1877-8585/ã 2016 Elsevier Ltd. All rights reserved.

Essen, and Zellweger (2015). They conducted a meta-analysis based on 108 primary studies, indicating that family firms invest less in innovation but do so more efficiently, resulting in a higher innovation output. Both review articles provide theoretical and empirical foundations to explain these patterns based on family involvement and family control. At the same time, they point out that in order to understand family firm innovation, it is necessary to gain a better understanding of the family firm’s innovation activities (De Massis et al., 2013) and to consider specific elements that render family firms different from non-family firms (Duran et al., 2015). Taking this as a starting point, and given the large number of newly published papers on the topic, the present review sets out to disentangle the family firm’s multi-staged innovation process by asking: (1) What do we empirically know about the distinctiveness of the family firm’s innovation process, and (2) considering that the family is the key differentiating variable between family and non-family firms, how does the family account for this distinctiveness? The methodology applied follows an evidence-based systematic review strategy as recommended by Tranfield, Denyer, and Smart (2003), being systematic, transparent, and reproducible so as to be conducive to the aim of enhancing methodological rigor. From this process, 78 empirical studies on innovation in family businesses were identified. To answer the research questions, the

186

I. Röd / Journal of Family Business Strategy 7 (2016) 185–201

review process was conducted in two stages. First, an in-depth analysis of empirical findings for the various stages of the innovation process was conducted. Second, the articles were searched systematically for content that can enhance our understanding of how the family influences these stages. As a result, the findings are reconciled in a conceptual framework that provides a holistic view of the innovation process by incorporating the family system as an influencing context variable. Building on the concept of familiness, the framework demonstrates how family factors affect the various stages of the family firm’s innovation process. Whether the family serves as an advantage or disadvantage for a business’s innovation behavior depends on contextual factors as well as on the familiness of the firm. The present article aims to contribute to the existing literature in various ways. First, it provides a comprehensive and topical overview of the literature on product, service, and process innovation in family firms during the period from 2001 to 2015. It particularly adds to our understanding by emphasizing the family firm’s innovation activities and identifying empirically supported family factors and how they account for the distinctiveness of the family firm’s innovation process. By successfully applying the concept of familiness as an explanatory model for innovation in family businesses, this review contributes to the development of an integrated theory of the family firm and answers the call for the adoption of a perspective “in which family factors figure more prominently in conceptual models and empirical investigations” (Aldrich & Cliff, 2003; p. 575). Finally, the present review further advances innovation literature by identifying antecedents of innovation beyond the common firm level of analysis and, therefore, takes an important step towards explaining innovation in a unique organizational type: the family firm. By becoming aware of family influence on innovation, not only scholars but also practitioners can benefit from aligning their innovation strategies with their own family idiosyncrasies. The remainder of this article is organized as follows. The following chapter provides a conceptual background for the review. Chapter 3 then introduces the methodology applied in the research process. In chapter 4, the empirical findings are presented, followed by the final chapter with the proposition of a conceptual framework based on the concept of familiness and a discussion of the body of knowledge. The article concludes by outlining several avenues for future research.

company’s resources leading to the creation of value (Lumpkin et al., 2011). Strategy, leadership, resource allocation, organizational culture, structure, organizational learning, and knowledge management all form important aspects of this stage (Crossan & Apaydin, 2010). The innovation output stage describes the form an innovation takes—product, service, process, or business model— and its magnitude: radical or incremental (Crossan & Apaydin, 2010). The present review adds a further dimension: the organizational benefits created by the process, that is, the outcome of innovation (Lumpkin et al., 2011). Furthermore, the innovation process is influenced by the context in which a firm operates, such as local and national conditions, industry, or company size. Other aspects, such as family ownership, management and governance structures, or multigenerational involvement, tend to be unique to the context of family firms (Lumpkin et al., 2011). Finally, in family firms, the family itself provides a specific context for the business (Frank, Lueger, Nosé, & Suchy, 2010) (Fig. 1). 2.2. The family in family business research

Previous studies on the innovation process and the role of the family in family business research provide the context for this review. First, the following section develops a framework for the multi-staged innovation process inspired by the seminal work of Lumpkin, Steier, and Wright (2011) with the aim of organizing existing research on the topic. Second, the family is introduced to the discussion as a unique contextual factor influencing the family business. Finally, conceptual arguments on the family firm’s distinctiveness in the innovation process are described.

The present review emphasizes the role of the family in the innovation process, as “without the recognition of the importance of the family system, we are left with a partial and incomplete view of the family business” (Zachary, 2011). Several concepts have been discussed in the family business literature to examine the family effect. The present review chooses as a theoretical viewpoint the concept of familiness based on Luhmann’s new systems theory. Viewing family businesses as social systems that combine two coupled systems (the family and the business), the family is able to influence the business via decision premises, which constitute communicated decisions that are relevant for a multitude of future company decisions (Luhmann, 1995; Von Schlippe & Frank, 2013). The familiness of the firm “is thus represented via the bundle of decision premises that expresses the influence of the business family on its business” (Frank, Kessler, Rusch, Suess-Reyes, & Weismeier-Sammer, 2016; p. 5). According to Luhmann’s view of systems, both the family and the firm consist of and define themselves through communication (Frank et al., 2016). Thus, the focus is not placed on individual members and the relationship between them (Von Schlippe & Frank, 2013). The advantage of this view is that it reduces complexity levels by describing the rules of the game rather than attempting to understand individual family members (Frank et al., 2016). While other concepts like the construct of socioemotional wealth (SEW) and familiness from a resource-based view are important in enhancing our understanding of family firms’ innovation, they each concentrate on partial aspects of the family system’s influence on the business: the family’s goals or the family’s resources, respectively. The present conceptualization of familiness offers a holistic view by capturing the different areas of the family’s influence, taking the family system as a whole into account. By adopting this view, the present review defines family factors as those family-related variables that reside within the family system and become evident in the business system.

2.1. The innovation process

2.3. Conceptual insights into the family’s influence on innovation

The organizational innovation process can be defined as a multi-stage process of generating and adopting new or improved products, services, processes, policies, structures, or administrative systems (Damanpour, 1991). The present review highlights the input-activity-output nature of this process (De Massis et al., 2013; Lumpkin et al., 2011). The innovation input stage is concerned with the resources a firm attributes to innovation (Lumpkin et al., 2011) like R&D expenditure or personnel dedicated to innovation. The innovation activity stage describes the orchestration of the

A highly contested topic in family business research is the “ability and willingness paradox,” which states that family firms tend to have a higher ability, yet lower willingness, to engage in innovation than do non-family firms (Chrisman, Chua, De Massis, Frattini, & Wright, 2015). The family firm’s ability to innovate is influenced by the combination of its long-term orientation, longterm leader tenures, tacit knowledge, strong family bonds, and social networks built up over generations (Patel & Fiet, 2011). Bennedsen and Foss (2015) refer to these family-based advantages

2. Conceptual background

I. Röd / Journal of Family Business Strategy 7 (2016) 185–201

187

Fig. 1. Framework of the multi-staged organizational innovation process. Source: Adapted from Lumpkin et al. (2011).

as family assets that can be transformed into liabilities, for example, when the family’s close networks hinder firms from being explorative. On the other hand, the family firm’s willingness to innovate is determined by the family owners’ goals, intentions, and motivations, such as risk-aversion or a reluctance to share control with non-family members (Chrisman et al., 2015a) and is heavily influenced by socioemotional concerns (Gómez-Mejía, Haynes, Núñez-Nickel, Jacobson, & Moyano-Fuentes, 2007). However, the relative importance of economic and non-economic goals varies between family firms and is dependent on governance structures, resources, and idiosyncratic situational factors, which accounts for the heterogeneous outcomes in terms of innovation (Chrisman et al., 2015a; Chrisman, Fang, Kotlar, & De Massis, 2015). As a result of these various influences, family firms are seen as rather incremental innovators (Carnes & Ireland, 2013; Hiebl, 2015). However, family firms that simultaneously engage in multiple levels of innovation, incremental and radical, are likely to enjoy sustainable performance advantages across generations (Sharma & Salvato, 2011). Therefore, family firms require both the ability and the willingness to be ready to innovate at different levels (Holt & Daspit, 2015). 3. Methodology The subsequent chapter describes the research process of an evidence-based systematic review strategy, adopting the

suggested research process set out by Tranfield et al. (2003): (1) planning the review, (2) conducting the review, and (3) reporting and disseminating the review. Having outlined the rationale and proposed methods of this review, the stage is set to identify relevant studies using explicit and reproducible selection criteria (Tranfield et al., 2003). First, bibliographical databases (ABI Inform Global and EBSCO Business Source Premier) were searched by applying search strings. To be potentially included in the review, the title of the article had to contain “innovat*,” “R&D,” “technology,” “new product,” OR “ambidext*” AND the abstract/topic had to contain “family firm,” “family business,” OR “family SME.” Only articles published in peer-reviewed academic journals in English after 2001 were included. This date was chosen because one of the seminal works on innovation in family firms was published that year (Litz & Kleysen, 2001) and because the electronic availability of academic articles before the turn of the century is fragmented. This initial search returned a total of 223 articles. Second, the abstracts identified were checked for the appropriate use of the search string (e.g., “family of innovations in the firm” was not included) and for duplicate listings, leading to the exclusion of 110 articles. Next, the content of the remaining 113 articles was scanned, and only articles deemed “fit for purpose,” in terms of contributing to answering the research questions, were considered relevant and therefore included. This amounted to a total of 61 articles. Finally, owing to limitations in the search of electronic

188

I. Röd / Journal of Family Business Strategy 7 (2016) 185–201

databases, an additional search was conducted of the three leading journals that almost exclusively address family business topics, using the same inclusion/exclusion criteria as previously stated. While the database-search of the “Family Business Review” did not produce any additional results, five additional papers were identified in the “Journal of Family Business Strategy,” and two in the “Journal of Family Business Management.” In addition, journals with special issues dedicated to family firms were scoured, resulting in two additional papers in the special issue of the “International Journal of Entrepreneurial Venturing,” and one paper in each of the “Journal of Product Innovation Management” and the “California Management Review.” Furthermore, the results were compared with the literature reviews of Duran et al. (2015) and De Massis et al. (2013), which led to the identification of two additional papers. Finally, another four forthcoming papers that had been pointed out to the author of this paper were included, resulting in a total of 78 articles. In order to produce unbiased results, no additional quality standards were applied in terms of the journals in which the articles were published. This approach is supported by Tranfield et al. (2003) and ensures that new and innovative ideas at an early stage of development are supported. However, books, book chapters, and conference papers were excluded owing to variability in peerreview processes and restrictions in availability (Suess, 2014). Finally, the remaining 78 articles were used to proceed with the analysis of the systematic research. A data extraction form was prepared to collect information on the authors, year, journal, methodological approach, type of innovation, size, and description of the sample, theories applied, and the main results of the study. The results of the present review are clear evidence of the growing awareness of innovation in family business research. While only eight of the appraised studies were published from 2001 to 2009, the number of studies since 2010 amounts to 70. The 78 articles identified appeared in 39 different academic journals, with 19 articles published in family business journals. Overall, “Family Business Review” contained the majority of papers (11), followed by the “Journal of Family Business Strategy” (6). The empirical studies use samples from Europe, the United States, Canada, and Asia. On the methodological dimension, quantitative studies (60) are more prevalent than qualitative ones (17). One study applied a mixed-methods approach. Regarding the organizational type under investigation, 27 studies deal with publicly traded firms, 34 with small- and medium-sized enterprises (SMEs), and 17 studies do not specify or deal with both kinds of organizational forms. Studies in the context of publicly traded firms mostly operationalize family businesses by applying the components of involvement approach through family ownership, management and/or governance. In comparison, several studies on private family firms include the essence approach by asking businesses to indicate a distinct behavior (e.g., Classen, Van Gils, Bammens, & Carree, 2012). 4. Empirical findings Following the categorization method of innovation (De Massis et al., 2013; Lumpkin et al., 2011) as outlined in the background chapter of this paper, the reviewed studies are classified under three headings: innovation input, activities, and output. First, empirical findings on the family firm’s distinctiveness along the multi-staged innovation process are presented, followed by the description of family factors that account for this distinctiveness. Disentangling empirical results in two subsequent steps in this way ensures that only findings with empirical evidence are included. Finally, the results are discussed in light of the previously presented conceptual insights.

4.1. The family firm’s distinctiveness in the innovation process 4.1.1. The innovation input stage 4.1.1.1. Investment in resources. There is growing empirical evidence that family firms invest less in innovation than do their non-family counterparts (De Massis, Di Minin, & Frattini, 2015). Most studies measuring these investments are set in the context of publicly traded family firms and draw from the negative side of agency theory. They typically operationalize innovation investments as R&D, that is, as R&D intensity (e.g., Block, 2012; Chen & Hsu, 2009; Matzler, Veider, Hautz, & Stadler, 2015; Munari, Oriani, & Sobrero, 2010; Muñoz-Bullón & Sanchez-Bueno, 2011). Several studies in the context of private family firms confirm a lower level of investment in R&D (e.g., Kotlar, Fang, De Massis, & Frattini, 2014). However, when considering different measures for innovation investment, the results appear less consistent. Using a sample of German listed firms, Schmid, Achleitner, Ampenberger, and Kaserer (2014) confirm the negative relationship between family management and R&D spending. However, when selfreported measures of R&D personnel are used instead of R&D information from financial statements, the effect is positive. These findings suggest that conservative reporting of R&D expenditures among family firms might lead external parties to underestimate their innovation efforts or that family firms overstate their innovation input in surveys. On the other hand, it might be an indication of family firms’ distinct way of investing in innovation. Drawing on a sample of Spanish family firms, Llach and Nordqvist (2010) find that family firms have a higher percentage of qualified R&D personnel than do their counterparts, and that they make greater cuts to these personnel in periods of economic downturn (Llach, Marquès, Bikfalvi, Simon, & Kraus, 2012). The survey responses of family firms’ employees indicate that they initiate more ideas for new products or services, which is related to the family firms’ distinct culture (Gudmundson, Tower, & Hartman, 2003). A notable exception to the measurement of R&D investment is identified by Classen, Carree, Van Gils, and Peters (2014), who find in their exploratory study that while family SMEs invest less intensively in R&D than do non-family firms, they have a higher propensity to do so in the first place. Another approach to capturing the firm’s tendency to innovate is defined as “innovativeness” (Lumpkin & Dess, 1996). Firms whose ownership is concentrated within one generation seem to translate this innovativeness more effectively into higher levels of performance than do firms in which several generations are involved, which could be a result of intergenerational conflicts (Kellermanns, Eddleston, Sarathy, & Murphy, 2012). 4.1.1.2. Innovation input in context. Building on the concept of SEW, several studies suggest that there is greater variability in R&D investment in family firms than in non-family firms, dependent on situation and contextual factors. Family firms change their innovative behavior when performance is below aspirational levels (Chrisman & Patel, 2012; Gómez-Mejía, Campbell, Martin, Hoskisson, Makri, & Sirmon, 2014; Patel & Chrisman, 2014), when supplier bargaining power increases (Kotlar et al., 2014), or when growth opportunities are present (Choi, Zahra, Yoshikawa, & Han, 2015). However, they reduce their R&D investments less than do non-family firms in the face of the threat of imitation (Sirmon, Arregle, Hitt, & Webb, 2008) or when credit is constrained during a recession (Beneito, Rochina-Barrachina, & Sanchis-Llopis, 2014). Another source of heterogeneity might be the wealth dispersion of the family, as family firms seem to invest more in R&D when the overlap between family wealth and firm equity is low (Sciascia, Nordqvist, Mazzola, & De Massis, 2015). This might be why several studies using samples of emerging economies find a positive

I. Röd / Journal of Family Business Strategy 7 (2016) 185–201

relationship between family involvement and R&D investment (Ashwin, Krishnan, & George, 2015; Chen, Tsao, & Chen, 2013; Kim, Kim, & Lee, 2008; Tsao & Lien, 2013). Policies in Taiwan, for example, allow families to tie less wealth closely to the firms they control (Chen et al., 2013). Overall, the empirical research largely supports the conceptual arguments that family firms are less willing to invest in innovation than are non-family firms, and that this unwillingness varies depending on contextual factors (Chrisman et al., 2015a). At the same time, empirical results suggest that this unwillingness applies to large financial investments and that family SMEs are likely to invest in at least some R&D. Moreover, they might prefer investments in other resources related to innovation, such as qualified personnel (Table 1). 4.1.2. The innovation activity stage 4.1.2.1. Strategy. An important strategic aspect considers whether a firm leverages its competencies and technologies towards external organizations (De Massis, Frattini, Pizzurno, & Cassia, 2015). Several studies find that family firms are less inclined to rely on external resources. In terms of innovation co-operations, they have a lower search breadth than do non-family firms (Classen et al., 2012) and are less likely to collaborate with others to achieve innovation (Nieto, Santamaria, & Fernandez, 2015) or to acquire technology from external sources (Kotlar, De Massis, Frattini, Bianchi, & Fang, 2013). However, they become more favorable to an open approach when protection mechanisms are in place, like the filing of patents for the firm’s proprietary technologies (Kotlar et al., 2013). While several case studies confirm that family firms are less open to the external environment (Cassia, De Massis, & Pizzurno, 2011; Cassia, De Massis, & Pizzurno, 2012), De Massis et al. (2015b) reveal in their multiple-case study that family firms rely on external sources of knowledge and technologies throughout the whole innovation process. This tends to take the form of “vertical” innovation partnerships with universities, public research centers, or suppliers, which are less likely to harm their SEW. Family firms are even more likely to establish external alliances aimed at technological exploration including R&D activities (Pittino, Visintin, Bau', & Mazzurana, 2013). Firms’ strategies also differ according to whether the goal of the innovation process is to develop radical or incremental innovation through exploration or exploitation (De Massis et al., 2015b). An organization’s ability to pursue both is defined as ambidexterity (O’Reilly & Tushman, 2004). Drawing on longitudinal data from shareholder letters, Allison, McKenny, and Short (2014) find that family firms’ ambidexterity is stable over time but is punctuated by dramatic changes. Applying the FPEC-Scale (Family Influence on Power, Experience, and Culture) on a sample of German family firms, Stubner, Blarr, Brands, and Wulf (2012) report evidence of higher degrees of organizational ambidexterity with increasing family influence. The importance of ambidexterity in family firms is supported by qualitative research suggesting that simultaneous engagement in exploration and exploitation is key to surviving critical incidents (McAdam, Reid, & Mitchell, 2010) and to ensuring the family firm’s long-term viability (Bergfeld & Weber, 2011). However, family firms differ from non-family firms in the way they pursue ambidexterity. In an Austrian case study, WeismeierSammer (2014) describes how the owning family takes over the role of the innovation incubator, while employees carry out exploitative activities. 4.1.2.2. Leadership. The roles and attitudes of the firm’s leaders will highly affect the innovation process. Drawing from upper echelon theory, Kraiczy, Hack, and Kellermanns (2014) measure a positive relation between the innovation orientation of the top

189

management team (TMT) and new product portfolio performance when multiple generations are involved in the TMT. However, this relation is reversed when the ratio of family members in the TMT is high. Furthermore, the CEO’s risk-taking propensity positively affects innovation. This effect is higher in earlier generations of family firms and in family firms where levels of ownership by family members on the TMT are low (Kraiczy, Hack, & Kellermanns, 2015). These findings indicate that concentrated family involvement in leadership will harm the innovation process. Overall, top managers in family firms are more likely to use strategic behavioral controls, measured in the form of formal and informal meetings, with a positive impact on innovation (Hsu & Chang, 2011). In a German multiple-case study, Kammerlander and Ganter (2015) explore how the non-economic goals of the family CEO determine the importance the CEO attaches to innovation and the need for the firm to react. For instance, the goal of “power and control” might entail the immediate interpretation of a new trend as important for maintaining influence and thus lead to innovation. A survey of family firm executives reveals that leaders with paradoxical thinking ability will be more likely to successfully manage the typical tensions in the family firm innovation process, such as tradition versus change, founder control versus successor autonomy, and family liquidity versus business growth (Ingram, Lewis, Barton, & Gartner, 2016). With regard to the role of project leaders in family firms, several case studies find them to be associated with high decisional autonomy, and to be driven by intrinsic motivations like increased status and reputation (De Massis et al., 2015b; De Massis, Kotlar, Frattini, Chrisman, & Nordqvist, 2016). 4.1.2.3. Resource orchestration. Resource orchestration entails the efficient use of employees and capabilities in the innovation process. Upon surveying parameters related to employees’ innovative work involvement, it appears that employees in family firms tend to be driven by perceived organizational support, feelings of obligation, and identified motivation, and, as a result, engage spontaneously in informal innovation activities (Bammens, Notelaers, & Van Gils, 2015). Similarly, SanchezFamoso, Maseda, and Iturralde (2014) find that non-family social capital is just as effective as family social capital for the family firm’s innovation. Qualitative data support the notion of a highly motivated and committed workforce (Cassia et al., 2012) that altruistically shares knowledge and proactively seeks solutions (De Massis et al., 2016a). However, the involvement of employees in the innovation process is more coherent with incremental rather than radical innovation (Bammens et al., 2015). The capacity of a firm to purposefully create, extend, or modify its resource base is defined as “dynamic capabilities” (Helfat et al., 2007). Drawing on survey data from SMEs in the United States, Craig and Dibrell (2006) show that family firms are better able than non-family firms to leverage their capabilities associated with environmental concerns into innovative outcomes. 4.1.2.4. Culture and structure. Family business culture is defined as “a personal belief and support of the organization’s goals and visions, a willingness to contribute to the organization, and a desire for a relationship with the organization” (Astrachan, Klein, & Smyrnios, 2002; p. 51). Overall, research provides evidence of a distinct family firm culture in favor of innovation. Craig, Dibrell, and Garrett (2014) measure the culture of family SMEs in terms of cohesion and attachment to the firm and find it to be positively associated with flexible planning systems. New product development activities in family firms are associated with an informal working environment and benefit from a departmental team structure with team members devoting part of their time to the project (De Massis et al., 2015b; De Massis et al., 2016a).

190

I. Röd / Journal of Family Business Strategy 7 (2016) 185–201

Table 1 Overview of key findings of selected articles on innovation input.a Author(s) and year

Sample

Method

Ashwin et al. (2015)

172 Indian listed firms from the pharmaceutical industry; family and non-family 3361 Spanish manufacturing firms; listed and non-listed; family and nonfamily 154 U.S. listed firms belonging to R&Dintensive industries; family and nonfamily A long-lasting family business from New Zealand

Quantitative

Resources

Quantitative

Input (resources) in context Resources

Beneito et al. (2014)

Block (2012)

Brines et al. (2013)

Quantitative

Aspect of innovation

Qualitative

Conditions for innovation

Chen et al. (2013)

516 Taiwanese listed firms from various industries; family and non-family

Quantitative

Resources

Chen and Hsu (2009)

369 Taiwanese listed firms in the electronic industries; family and nonfamily

Quantitative

Resources

Choi et al. (2015)

298 South Korean listed family firms

Quantitative

Chrisman and Patel (2012)

964 U.S. listed manufacturing firms from various industries; family and non-family

Quantitative

Input (resources) in context Input (resources) in context

Classen et al. (2014)

2,087 German SMEs from various industries; family and non-family

Quantitative

Resources

Gómez-Mejía et al. (2014)

610 U.S. listed firms from the hightechnology industries; family and nonfamily

Quantitative

Input (resources) in context

Gudmundson et al. (2003) Kammerlander et al. (2015)

4,202 individual responses from 89 U.S. SMEs; family and non-family 41 Italian family firms from the winery industry

Quantitative

Resources

Qualitative

Conditions for innovation

Kellermanns et al. (2012)

70 U.S. family firms

Quantitative

Resources

Kim et al. (2008)

253 South Korean listed manufacturing firms in R&D-intensive industries; family and non-family 431 Spanish private manufacturing firms; family and non-family

Quantitative

Resources

Quantitative

Input (resources) in context Conditions for innovation

Kotlar et al. (2014)

Key findings Family shareholding and control over CEO and chairperson positions have a positive and significant influence on the firm’s R&D investments In family-owned firms the responsiveness of R&D to the business cycle is considerably less dependent on credit constraints, especially during periods of recession Family ownership decreases R&D intensity

Adopting principles of complexity thinking and a Schumpeterian lens can inform and extend understanding of innovation within entrepreneurial family SMEs Family firms invest more in innovation than non-family firms, especially when families have voting-cash flow rights divergence and operate in high-tech industries Family ownership discourages R&D investments. Firms with high family ownership may increase R&D investment when the CEO-chair roles are separated or when more independent outsiders are included on the board Family ownership is negatively related to R&D investment, but the relationship becomes positive when growth opportunities are present Family firms invest less in innovation than non-family firms, but when performance is below aspirational levels, R&D investments increase and the variability of those investments decrease relative to non-family firms Family SMEs have a higher propensity to invest in innovation in the first place, but do so less intensively than non-family firms Family firms are less prone to invest in R&D compared with non-family firms. As institutional ownership or related diversification increases family firms are more likely to invest in R&D Family firms initiate more innovations, because they create a culture that is more supportive and empowering Founder focus in shared stories across generations is negatively associated with innovation, while family focus has the opposite effect While innovativeness has a positive effect on family firm performance, firms with concentrated generational ownership benefit most from innovativeness Financial slack has an inverted U-shaped relationship with R&D investments. Family ownership positively moderates this relationship Family firms react more strongly to increasing supplier bargaining power when their profitability reference points have been reached Intergenerational and intra-organizational innovation must be preceded by deliberate initiatives that facilitate the formation of relevant competencies in the succeeding generation Family firms tend to devote more human capital to innovation In a recession context family firms make significantly bigger cuts in R&D than non-family firms Family participation in management and governance has a negative impact on innovation input Socioemotional preferences, together with their impact on resources and the innovation demands of the markets, shape the family firm’s approach to innovation Family ownership is negatively associated with R&D investment Listed family firms in Canada record lower R&D intensity than non-family firms

Litz and Kleysen (2001)

The Brubeck family, a U.S. family of jazz players

Qualitative

Llach and Nordqvist (2010) Llach et al. (2012)

151 Spanish manufacturing firms; family and non-family 88 Spanish manufacturing firms; family and non-family 134 German listed firms from various industries; family and non-family 7 family firms from different countries; private and listed

Quantitative

Resources

Quantitative

Resources

Quantitative

Resources

Qualitative

Conditions for innovation

1,000 listed firms from several EU countries; family and non-family 736 Canadian listed firms from various industries; family and non-family

Quantitative

Resources

Quantitative

Resources

15,173 observations from Spanish manufacturing firms; family and nonfamily 847 U.S. listed manufacturing firms from various industries; family and non-family

Quantitative

Resources

Family firms perform fewer innovation efforts than nonfamily firms

Quantitative

Input (resources) in context

Quantitative

Resources

When performance exceeds aspirations, family firms make exploitative R&D investments, whereas when performance is below aspirations they make exploratory R&D investments Based on the self-reported measures of R&D personnel, R&D is higher in family managed firms. However, this effect disappears when using R&D information from financial statements

Matzler et al. (2015) Miller et al. (2015)

Munari et al. (2010) Muñoz-Bullón and Sanchez-Bueno (2011) Nieto et al. (2015)

Patel and Chrisman (2014)

Schmid et al. (2014)

641 German listed firms from various industries; family and non-family

I. Röd / Journal of Family Business Strategy 7 (2016) 185–201

191

Table 1 (Continued) Author(s) and year

Sample

Method

Sciascia et al. (2015)

240 Italian SMEs from various industries; family and non-family

Quantitative

Input (resources) in context

Sirmon et al. (2008)

2,531 French SMEs in manufacturing industries; family and non-family firms

Quantitative

Input (resources) in context

Tsao and Lien (2013) Tsao et al. (2015)

776 Taiwanese listed firms from various industries; family and non-family 375 Taiwanese listed firms across four R&D-intensive industries; family and non-family 100 South Korean listed firms; family and non-family

Quantitative

Resources

Quantitative

Resources

Quantitative

Input (resources) in context

Yoo and Sung (2015)

Aspect of innovation

Key findings When there is a high overlap between family wealth and firm equity the relationship between family ownership and R&D intensity is negative, whereas when the overlap is low, the relationship becomes positive Family-influenced firms are less rigid in their responses to threats of imitation, reducing their R&D investments and internationalization significantly less than firms without family influence Family management positively moderates the relation between internationalization and innovation/performance The sensitivity of CEO compensation to R&D investment is higher for family firms than for non-family firms Family control is positively related to a firm’s R&D spending, especially when growth opportunities are limited

a Number of studies displayed in all tables exceeds 78, as several studies deal with more than one aspect of the innovation process. Not all studies listed in the tables are thematised within the body of text.

Family-owned businesses have a strong service-dominant focus and are more capable of incorporating stewardship cultural behaviors in their customer service processes, which increases their organizational innovativeness in comparison to non-family firms (Dibrell & Moeller, 2011). 4.1.2.5. Organizational learning and knowledge. A multiple-case study of six long-standing Italian family firms illustrates how the dynamic capabilities of interiorizing and reinterpreting past knowledge can help family firms to innovate through tradition (De Massis, Frattini, Kotlar, Messeni Petruzzelli, & Wright, 2016). Family social capital, relational conflicts, and family members’ affective commitment influence a family firm’s ability to internalize its members’ knowledge of innovation (Chirico & Salvato, 2016). Alberti and Pizzurno (2013) find that family firms particularly benefit from sharing knowledge with network partners. Moreover, technological and especially market knowledge are both relevant for family firms. Overall, empirical findings confirm that family firms follow different innovation strategies than do non-family firms. When comparing innovation input with output and in line with the “ability and willingness paradox,” various findings comparing innovation input with output suggest that firms with family involvement innovate more efficiently than do non-family firms (Lodh, Nandy, & Chen, 2014; Matzler et al., 2015) (Table 2). 4.1.3. The innovation output stage 4.1.3.1. Form and magnitude of innovation. Regardless of the measurement method and of the samples used, findings on the distinctiveness of the family firm’s innovation output stage remain largely inconsistent and controversial. In the context of publicly traded firms, some studies identify a negative relationship between family involvement and patent counts/forward citations (Block, Miller, Jaskiewicz, & Spiegel, 2013; Chin, Chen, Kleinman, & Lee, 2009), while others seem to suggest the opposite (Matzler et al., 2015; Tsao & Lien, 2013). Studies in the context of SMEs mostly use subjective measures by means of self-reported innovation output for products, services, or processes. While some of these studies state that family businesses implement more innovation in terms of products and services than do non-family firms (Gudmundson et al., 2003), others do not find any significant difference in terms of new products for the firm launched into the market (Llach & Nordqvist, 2010). However, in periods of recession, family firms reduce their product innovation compared to nonfamily firms, leading to less innovation output (Llach et al., 2012).

Differentiating between various kinds of innovation output, Classen et al.’s (2014) results confirm that the family SME is positively but not significantly related to product innovation, but significantly and positively related to process innovation. In general, there seems to be a consensus that family firms tend to produce incremental innovation (Alberti & Pizzurno, 2013; De Massis et al., 2015b; Nieto et al., 2015), and are even more likely to do so than non-family firms (Nieto et al., 2015). Firms managed by successor generations in particular are more likely to resist introducing risky products, which may lead to the renewal of their market entry competencies, but at the same time compromise their technological competencies (Cucculelli, Le Breton-Miller, & Miller, 2016). With regards to the question of whether family firms produce more or less innovation output than do non-family firms, inconsistencies could be caused by studies not sufficiently differentiating between different forms or magnitudes of innovation output, such as incremental or radical innovation. Furthermore, differences in the definitions of family business applied mean that results are not always easily comparable. Only one study covers the topic of business model innovation, using the example of a Denmark-based family-owned airline. The family business reduces environmental uncertainty by developing several new business models in succession. The family plays an important role in balancing internal and external influences (Bogers, Boyd, & Hollensen, 2015). 4.1.3.2. Innovation outcome. The impact of the family on innovation outcome seems to be as contradictory as the general discussion about innovation output. On the one hand, retailers that are perceived as family firms will benefit from a higher level of new product acceptance, suggesting that customers associate family firms with trustworthiness and ethical product-related behavior (Beck & Kenning, 2015). On the other hand, Taiwanese family firms receive a significantly weaker market response when announcing innovations than do non-family firms, as investors might associate family firms with agency problems (Chang, Wu, & Wong, 2010). However, a study in the U.S. market reveals that the presence of the founding family’s name as part of the firm’s name increases the abnormal stock returns surrounding the firm’s new product introduction in comparison to family firms that are not identified as such by the company’s name (Kashmiri & Mahajan, 2014). These diverse results might be attributable to regional differences in investors’ perception of family firms. Kraus, Pohjola, and Koponen (2012) find that in reference to the innovation– performance relationship, family firms benefit more from organizational innovation than do non-family firms, but less

192

I. Röd / Journal of Family Business Strategy 7 (2016) 185–201

Table 2 Overview of key findings of selected articles on innovation activity.a Aspects of innovation

Key findings

Qualiquantitative

Knowledge/ Learning

149 U.S. listed family firms from various industries

Quantitative

Strategy

Bammens et al. (2015)

893 Belgian employees from various industries, family and non-family

Quantitative

Resource orchestration

Bergfeld and Weber (2011)

10 German dynastic family firms

Qualitative

Strategy

Cassia et al. (2011)

4 Italian family SMEs from different industries

Qualitative

Strategy

Cassia et al. (2012)

10 Italian firms belonging to different industries, family and non-family 199 Swiss family firms

Qualitative

Strategy

Family firms' performance is positively correlated with new product development (NPD), market knowledge rather than technological knowledge, and knowledge sharing rather than knowledge availability Family firm ambidexterity is stable over time, but is punctuated by dramatic changes. The level of innovation required to compete in an industry is a predictor of changes in exploration versus exploitation Family business employment is positively associated with employees’ innovative work involvement, which is partly attributed to their heightened perception of organizational support and work motivations Successful dynastic family firms develop a culture of radical and progressive innovation in order to safeguard their long-term viability Family firms with shared family values, a high desire to establish a family reputation, high level of communication among family members and low agency costs are likely to experience more successful NPD processes Family involvement is positively associated with NPD long-term thrust and a strong project leader

Quantitative

167 manufacturing SMEs from Belgium and the Netherlands; family and non-family 391 U.S. SMEs from various industries; family and nonfamily

Quantitative

Knowledge/ Learning Strategy

Family members’ affective commitment to the firm has a mediated and a direct effect on product development Family firms have a lower search breadth in their innovative activities than non-family firms

Quantitative

Resource orchestration

Family firms are better able to facilitate environmentally friendly firm policies associated with improved firm innovation and greater financial performance more effectively than non-family firms Family influence positively influences family culture, family culture improves the ability of families to be strategically flexible and this flexibility positively impacts firm innovativeness Family firms rely on a relatively high number of external collaborations, on a functional organization, with high levels of decisional autonomy given to the project leader, and on a largely informal and unstructured organizational climate in their product innovation process Product development programs in family SMEs with external project leaders outperform those with internal project leaders, those with departmental team structure outperform those with cross-functional teams of dedicated human resources By applying a product innovation strategy based on tradition family firms can leverage knowledge from the past to develop new product functionalities Family-owned businesses have a strong service-dominant focus and are more capable of incorporating stewardship cultural behaviors in their customer service processes resulting in increased organizational innovativeness compared to non-family firms Family ownership is significantly related to the use of behavioral strategic controls, which positively impacts innovation Paradoxical tensions may stymie innovative behavior, but leaders’ paradoxical thinking is positively related to innovative behavior A family CEO’s specific non-economic goals determine whether the CEO assesses an emerging technology as relevant enough to warrant a reaction from the firm Family firms are generally more reluctant to acquire external technology and the effect of negative aspiration performance gaps is less relevant than in non-family firms. However, they become more open when protection mechanisms are in place The relationship between TMT innovation orientation and new product portfolio performance is positive when multiple generations are involved in the TMT. The relationship turns negative when the ratio of family members in the TMT is high The positive relationship between CEO risk-taking propensity and new product portfolio innovativeness is weaker if levels of ownership by family members on the TMT are high but stronger in family firms at earlier generational stages Formal learning has a positive impact on young firms’ innovation. Market condition, industry sector, business goal and long-term orientation positively affect family firm innovation

Author(s) and year

Sample

Alberti and Pizzurno (2013)

74 Italian family SMEs//4 firms from the textile industry for the qualitative study

Allison et al. (2014)

Chirico and Salvato (2016) Classen et al. (2012)

Craig and Dibrell (2006)

Method

Craig et al. (2014a)

250 U.S. family SMEs from the food processing industry

Quantitative

Culture and structure

De Massis et al. (2015b)

10 Italian SMEs, family and nonfamily

Qualitative

Leadership/ Strategy/ Culture and structure

De Massis et al. (2016a)

Six Italian family SMEs

Qualitative

Leadership/ Resource orchestration

De Massis et al. (2016b)

Six Italian long-lasting family firms

Qualitative

Knowledge/ Learning

Dibrell and Moeller (2011)

307 U.S. firms from the food processing industry; family and non-family

Quantitative

Culture and structure

Hsu and Chang (2011) Ingram et al. (2016)

124 manager from 76 Taiwanese listed family firms 93 family firms

Quantitative

Leadership

Quantitative

Leadership

Kammerlander and Ganter (2015)

7 German family firms from the consumer goods industry

Qualitative

Leadership

Kotlar et al. (2013)

1,540 Spanish private manufacturing firms; family and non-family

Quantitative

Strategy

Kraiczy et al. (2014)

63 German family SMEs in manufacturing industries

Quantitative

Leadership

Kraiczy et al. (2015)

114 German family SMEs in manufacturing industries

Quantitative

Leadership

Laforet (2013)

68 small family firms from the UK

Quantitative

Knowledge/ Learning

I. Röd / Journal of Family Business Strategy 7 (2016) 185–201

193

Table 2 (Continued) Aspects of innovation

Key findings

Qualitative

Business processes

102 Chinese listed family firms from various industries

Quantitative

Resource orchestration

151 Spanish manufacturing firms; family and non-family 395 Indian listed firms; family and non-family Five family firms from the manufacturing industry

Quantitative

Strategy

Quantitative

Resource orchestration Strategy

The technology adoption process in this micro-family firm is influenced by the interplay of different factors (familiar and non), that favor and discourage the process itself, in a complex balance of opposing forces Family involvement in boards tends to strengthen the positive relationship between R&D investment and innovation performance, whereas family involvement in management teams tends to weakens it Family firms cooperate more with other firms than non-family firms, especially in production Family ownership positively affects innovation productivity

Author(s) and year

Sample

Lazzarotti (2013)

An Italian micro-family firm

Liang et al. (2013)

Llach and Nordqvist (2010) Lodh et al. (2014) McAdam et al. (2010)

285 firm-year observations from U.S. listed firms; family and nonfamily 15,173 observations from Spanish manufacturing firms; family and non-family 508 Italian SMEs from various industries; family and nonfamily

Method

Qualitative

Quantitative

Resources orchestration

Quantitative

Strategy

Quantitative

Strategy

172 Spanish private family firms

Quantitative

199 U.S. family SMEs from various industries

Quantitative

Resource orchestration Resource orchestration

Stubner et al. (2012)

104 German family firms

Quantitative

Strategy

WeismeierSammer (2014)

An Austrian family business in the tourism industry

Qualitative

Strategy

Memili et al.(2015)

Nieto et al. (2015)

Pittino et al. (2013)

Sanchez-Famoso et al. (2014) Spriggs et al. (2013)

Critical incidents interact with the firm's lifecycle stage and its approach to family versus business, to either act as a catalyst for developing more radical innovation or in maintaining the status quo or continuous improvement Family ownership with a majority of second or later generations exhibit lower levels of value creation capabilities compared to non-family firms Family firms are less inclined to turn to external sources of innovation like technological collaboration than non-family firms Family firms rely more on exploration-oriented alliances than non-family firms. Their technology sourcing strategy tends to shift towards exploitation goals as organizational knowledge codification and formalization take place Social capital of both family members and non-family members has a direct and positive effect on innovation Innovative capacity has a significantly positive relationship to family firm performance. However, the combined impact of innovative capacity and collaborative network orientation on performance depends on the dispersion of ownership Family influence leads to higher degrees of ambidexterity, especially through family power and cultural alignment between family and firm interests An innovation-oriented familiness enables the business to split up the innovation process and allows for the exploitation and exploration of new ideas simultaneously

a Number of studies displayed in all tables exceeds 78, as several studies deal with more than one aspect of the innovation process. Not all studies listed in the tables are thematised within the body of text.

from managerial innovation. In comparison, Cucculelli (2013) states that firms with high levels of family influence will benefit less from innovation in the form of new products brought to market than will those with less family influence.

reason for or the result of their focus on incremental innovation output (Table 3).

4.1.3.3. Innovation output in context. Research suggests that highly innovative firms are more likely to be found among firstgeneration firms (Kraiczy et al., 2015; Pittino & Visintin, 2009), whereas later-generation family firms show a lower level of innovation (Beck, Janssens, Debruyne, & Lommelen, 2011). The succession phase is perceived as a peculiar period of adjustment, which might impact innovation in family firms in both positive and negative ways (Hauck & Prügl, 2015). Overall, empirical results largely support the conceptual arguments that family firms are largely incremental innovators (Carnes & Ireland, 2013; Hiebl, 2015). Several findings along the family firm’s innovation input and activity stages support this view. For example, the higher propensity but lower intensity of the family firm’s innovation investment (Classen et al., 2014), the higher involvement of employees in the innovation process (Bammens et al., 2015), and the lower necessity to be risk-taking in order to achieve high innovation output (Craig, Pohjola, Kraus, & Jensen, 2014), are all indications for incremental innovation. However, the tendency of family firms to engage in incremental innovation might be a consequence of the family firm’s choice of industry, accompanied by a certain kind of customer interaction (Grundström, Öberg, & Öhrwall Rönnbäck, 2012). Therefore, we do not know if family firms’ distinct innovation strategies are the

When scouring articles for evidence of the influence of familyrelated factors on the innovation process, a number of topics were found to recur frequently. These are summarized in the following chapter.

4.2. Family factors influencing the innovation process

4.2.1. Family factors and the innovation input stage 4.2.1.1. Long-term orientation and continuity. As demonstrated in several case studies, the business family’s long-term orientation and the ambition of the incumbent to extend the entrepreneurial dream through generations are common features among family SMEs. Regardless of their success in new product development, this will foster investments in long-term activities such as R&D and new product development (Cassia et al., 2011, 2012). Drawing on a longitudinal case study within the German consumer goods industry, Kammerlander and Ganter (2015) demonstrate that the family CEO’s desire for transgenerational value transfer influenced his interpretation of a new technology as relevant because he feared that non-adoption would jeopardize his non-economic goals. 4.2.1.2. Conservatism and risk aversion. Evidence from several Italian case studies indicates that the family’s aim to ensure the

194

I. Röd / Journal of Family Business Strategy 7 (2016) 185–201

Table 3 Overview of key findings of selected articles on innovation output.a Author(s) and year

Sample

Method

Aspects of innovation

Key findings

Alberti and Pizzurno (2013)

74 Italian family SMEs//4 firms from the textile industry for the qualitative study 172 Indian listed firms from the pharmaceutical industry; family and non-family firms 111 family SMEs from Belgium and the Netherlands 142 consumers of German retailers

Qualiquantitative

Form and magnitude

New product development in family firms often takes the form of incremental innovation of current products

Quantitative

Form and magnitude

Family shareholding and control over CEO and chair positions is not significantly related to patent counts

Quantitative

Output in context Outcome

Ashwin et al. (2015)

Quantitative

Form and magnitude

Later-generation family firms show a lower level of marketoriented behavior, which reduces innovation A strongly perceived family firm image has a direct positive effect and, through perceived trustworthiness, an indirect effect on new product acceptance Family-managed firms receive fewer patent citations compared with other firms

Quantitative

Form and magnitude

Regions with a higher family firm density show higher levels of innovation output

Qualitative

Form and magnitude

359 innovation announcements made by181 Taiwanese listed firms; family and non-family 317 Taiwanese listed firms in the electronic industry; family and non-family 2,087 German SMEs from various industries; family and nonfamily

Quantitative

Outcome

Quantitative

Form and magnitude

The family plays an important role in balancing internal and external influences shaping the scope and complexity of the business model, and creating specific path dependencies Firms with greater family control experience a significantly more negative reaction on the stock market to innovation announcements The tight control characterizing the corporate ownership structure of family firms reduces the innovativeness of the firm

Quantitative

Form and magnitude

532 Finnish firms from various industries; family and nonfamily 142 Italian family SMEs from the manufacturing industries

Quantitative

Output in context

Quantitative

Outcome

Qualitative

Form and magnitude Form and magnitude Form and magnitude

Grundström et al. (2011)

10 Italian SMEs, family and nonfamily 220 Italian manufacturing SMEs; mostly family firms 4,202 individual responses from 89 U.S. SMEs; family and nonfamily 10 Swedish family SMEs from the manufacturing industry

Grundström et al. (2012)

Beck et al. (2011) Beck and Kenning (2015) Block et al. (2013)

Block and Spiegel (2013) Bogers et al. (2015)

Chang et al. (2010)

Chin et al. (2009)

Classen et al. (2014)

Craig et al. (2014b)

Cucculelli (2013)

De Massis et al. (2015b) Cucculelli et al. (2016) Gudmundson et al. (2003)

248 U.S. listed firms from various industries; family and nonfamily 326 German regions with the locations of 526 family SMEs in innovative industries A Denmark-based family firm in the aviation industry

Quantitative

Quantitative Quantitative

Family firms tend to outperform non-family firms in terms of process innovation outcomes (controlled for innovation investment). Given the level of product and process innovation they underperform in terms of labor productivity Family firms benefit more from proactivity and less from risktaking than non-family firms Innovation is crucial for high-growth firms, but only for those with low family influence on the process of decision making concerning the introduction of a new product Family firms engage in innovation processes aimed at developing and bringing to market incremental new products or services Family governance inhibits the kinds of new product introductions that renew competencies, especially in successor generations Family firms implement more innovations than non-family firms

Qualitative

Form and magnitude

10 Swedish family SMEs from the manufacturing industry

Qualitative

Form and magnitude

Hauck and Prügl (2015)

81 Austrian family firms in the tourism industry

Quantitative

Output in context

Kashmiri and Mahajan (2014)

1,294 product introduction announcements from 107 U.S. listed family firms from various industries 533 Finnish firms from various industries, family and nonfamily 114 German family SMEs in manufacturing industries

Quantitative

Outcome

Quantitative

Outcome

Organizational innovation is significantly related to corporate success in family firms, whereas managerial innovation is not

Quantitative

Output in context

The effect of CEO risk-taking propensity on new product portfolio innovativeness is stronger in family firms at earlier generational stages Family firms tend to launch a higher proportion of new products both for the firm and the market compared to non-family firms. However, statistical significance is only measured for new products of the firms that are new to the market as well In a recession context family firms reduce their product innovation more than non-family firms, though no statistical significant difference is measured Family participation in management and governance has a positive impact on innovation output

Kraus et al. (2012)

Kraiczy et al. (2015)

Llach and Nordqvist (2010)

151 Spanish manufacturing firms; family and non-family

Quantitative

Form and magnitude

Llach et al. (2012)

88 Spanish manufacturing firms; family and non-family

Quantitative

Form and magnitude

Matzler et al. (2015)

136 German listed firms from various industries; family and non-family

Quantitative

Form and magnitude

The view and management of innovativeness can neither be simply related to the type of new owner, nor can these aspects be fully understood from the processes of ownership transfer Regardless of internal or external takeover the SMEs’ innovativeness focuses largely on within-frame, incremental innovation. The focus on radical/incremental innovation is largely a consequence of the type of SME, customer interaction and the kind of innovation produced Family adaptability and family members' closeness to the firm are positively associated with perceiving the succession phase as an opportunity for innovation, while intergenerational authority and the history of family bonds are negatively associated The presence of the founding family’s name as part of a family firm’s name increases the abnormal stock returns surrounding the firm’s new product introductions

I. Röd / Journal of Family Business Strategy 7 (2016) 185–201

195

Table 3 (Continued) Author(s) and year

Sample

Method

Aspects of innovation

Key findings

Nieto et al. (2015)

15,173 observations from Spanish manufacturing firms; family and non-family 141 Italian family SMEs

Quantitative

Form and magnitude

Family firms are more likely to achieve incremental innovations than radical innovations

Quantitative

Output in context

776 Taiwanese listed firms from various industries; family and non-family 252 U.S. listed firms; family and non-family

Quantitative

Form and magnitude

Prospectors firms are more likely to be first generation firms, followed by the analyzers, whereas the highest percentage of family firms beyond second generation belongs to the defenders and reactors groups Family management positively moderates the relation between internationalization and innovation/performance

Quantitative

Form and magnitude

Pittino and Visintin (2009)

Tsao and Lien (2013) Wagner (2010)

Being a family firm positively moderates the relationship between corporate social performance and innovation with high social benefits

a Number of studies displayed in all tables exceeds 78, as several studies deal with more than one aspect of the innovation process. Not all studies listed in the tables are thematised within the body of text.

longevity of the business and financial security of the family may result in conservatism and risk aversion, thus serving as a hindrance to an innovation-friendly firm climate (Cassia et al., 2011, 2012; De Massis et al., 2015b). However, taking a quantitative approach by measuring risk-taking as part of the entrepreneurial orientation construct, it is recognized that risk-taking might not be as important for the creation of innovation in family firms as it is in non-family firms (Craig et al., 2014b). 4.2.1.3. Maintaining ownership and control. Business families that fear losing control tend to be reluctant to seek external funding and are consequently often capital constrained. However, the low propensity of family entrepreneurs to be open to external investors can have positive as well as negative consequences for innovation (Cassia et al., 2011). Presenting several case studies of family firms that differ from each other in their SEW preferences, Mille, Wright, Le Breton-Miller, and Scholes (2015) describe how some family firms build war chests to fund innovations internally, which allows them to remain independent and decide upon innovation projects more swiftly with less bureaucracy. Similarly, a case study sample of a German family firm illustrates that the CEO’s goal for control resulted in more innovative behavior, as failing to adopt new technology could have resulted in a loss of power and control (Kammerlander & Ganter, 2015). These findings support the SEW perspective by suggesting that family firms are more willing to protect the family’s gains through innovation when the family’s SEW is at risk (Gómez-Mejía et al., 2014). 4.2.1.4. Propensity for parsimony. The large overlap between family wealth and firm equity means concerns surrounding the business family’s prosperity, resulting in great caution when dealing with resources. As qualitative data suggests, this careful preservation of resources hinders the inclination to experiment with costly and radical new business opportunities with largely unpredictable outcomes (De Massis et al., 2015b), providing another explanation for lower levels of R&D investment in family firms. 4.2.1.5. Interplay between older and younger generations. Litz and Kleysen (2001) draw on the example of the Brubeck family, a family of professional jazz players, to demonstrate that intergenerational innovation must be preceded by deliberate initiatives that facilitate the formation of relevant competencies in the succeeding generations. At the same time, permitting the next generation to experiment and granting them responsibility will foster innovation. The inter-family leadership succession phase is a particularly tricky period for innovation, as demonstrated in a

quantitative study by Hauck and Prügl (2015). While family adaptability and the closeness of family members to the firm are positively associated with perceiving the succession phase as an opportunity for innovation, intergenerational authority and the history of family bonds have the opposite effect. Interpreting narratives of 41 Italian family firms, Kammerlander, Dessì, Bird, Floris, and Murru (2015) explore the relationship between shared family stories and innovation. The focus on the founder in these stories leads to less decision-making power being vested in the younger generation, which reduces their motivation to bring in new, innovative ideas. However, the focus on the family has a positive effect on innovation. Finally, in some cases, both the family’s collective orientation and strong family ties and their enduring ties with stakeholders negatively influence the innovation input decision. Family CEOs that focus on these SEW preferences are restricted in their set of possible responses as they seek to avoid taking action that could harm social ties, subsequently hindering essential changes and resulting in less innovation (Kammerlander & Ganter, 2015). According to conceptual arguments, a firm’s willingness to innovate is based on the goals, intentions and motivations of the family to influence the firm’s behavior, which results in a tendency toward less innovation (Chrisman et al., 2015a). However, business families contain a highly variable set of goals with different potential effects on innovation. Furthermore, factors related to family dynamics and the family’s attitude towards others may have both positive and negative effects on the innovation input stage. As the present review demonstrates, the business family, with its goals and values, acts as an effective guiding system for the firm. Therefore, family factors represent basic rules and potential decision premises for innovation input decisions in the company. By ensuring that these decision premises frame the decisions for the innovation process, the business family exerts its influence over the business, irrespective of whether the family is directly involved in the subsequent decisions (Frank et al., 2016). 4.2.2. Family factors and the innovation activity stage 4.2.2.1. Monitoring power over managers. Several qualitative case studies have assessed the impact of the business family’s tight control on the innovation activity stage. For example, families that ensure that innovation processes are effectively monitored, reduce agency costs, and support the strong strategic focus of the innovation program (Cassia et al., 2011, 2012). However, restricting authority to the family circle might result in a lack of personnel with sufficient qualifications, know-how, and commitment to innovation (De Massis et al., 2016a).

196

I. Röd / Journal of Family Business Strategy 7 (2016) 185–201

4.2.2.2. Collective orientation and strong family ties. Quantitative studies measuring shared family visions and goals report that these have a positive influence on innovation (Craig et al., 2014a; Sanchez-Famoso et al., 2014). Mutual trust and time spent together allow family members to internalize and thus use their expert knowledge to modify or develop new products (Chirico and Salvato, 2016). Qualitative research confirms that shared family values and cohesiveness, high levels of communication, and sharing information among family members foster the successful organization of innovation activities (Cassia et al., 2011). Nevertheless, non-family members might consider innovation to be a “family affair” and oppose subjective decisions influenced by family bonds, causing conflicts and communication problems in innovation projects (Cassia et al., 2012). 4.2.2.3. Conflict of interest and nepotism. A mixture of blood and professional relationships means that family businesses are at risk of less rational decision-making and frequent conflicts (Cassia et al., 2012). Qualitative data have shown that conflicts are common even in family firms with high levels of success in new product development (Cassia et al., 2011). This seems to indicate that they cannot be seen to affect the success of the innovation process. However, these unexpected findings may stem from an undifferentiated definition of conflicts in these case studies (Cassia et al., 2011). While work conflicts might be beneficial, the quantitative measurement of family relationship conflicts clearly shows a negative impact on the ability of family members to recognize, understand, and exploit each other’s knowledge with respect to innovation (Chirico & Salvato, 2016). Furthermore, family firms are known for nepotism. Using the case of a Canadian dry goods department store, Miller et al. (2015) illustrate how positions are filled with loyal family members, irrespective of their qualifications, which results in a demotivated workforce. 4.2.2.4. Commitment, closeness to the firm, and strong leadership. The effect of family members’ strong attachment to the firm has been quantitatively confirmed. As such, family managers are found to identify strongly with the organization, which improves the family firm’s ability to be strategically flexible (Craig et al., 2014a). Moreover, family members’ affective commitment to the firm is shown to be so powerful that it has both a mediated and a directly positive effect on product development (Chirico & Salvato, 2016). De Massis et al. (2015b) provide qualitative empirical evidence that strong family leadership and a high level of personalism account for an informal, but efficient decision making in the new product development process. 4.2.2.5. Enduring ties with stakeholders and the community. Family businesses invest in enduring relationships with internal and external stakeholders (Miller et al., 2015). Research exploring the essence of these relationships is based on qualitative case studies. For example, when family members are committed and motivated, these traits are transferred to non-family employees, which contributes to the establishment of an innovation-friendly climate (Cassia et al., 2011). As one interviewee frames it, there is a sense that all individuals are “part of a big family” (Cassia et al., 2012; p. 216). The family’s wish to be visible to key stakeholders like suppliers and distributors, as well as their desire for community status and reputation, will lead family firms to pursue high levels of market orientation and quality in their innovation projects (Cassia et al., 2011; Cassia et al., 2012). 4.2.2.6. Closure to the external environment. This is in contrast to the family entrepreneur’s reputation as “inward-looking” (Cassia et al., 2011). As discussed previously, this closure to the external

environment will result in a low propensity to leverage external sources of innovation (e.g., Cassia et al., 2012), but this is mainly restricted to horizontal partnerships (De Massis et al., 2015b). Intriguingly, in some cases, this low level of openness has a positive influence on innovation, as the preservation of know-how within the family avoids possible unintentional spillovers, securing a competitive advantage (Cassia et al., 2012). Finally, factors that are often cited as influencing the innovation input stage, like long-term orientation and continuity or the propensity for parsimony, will also affect the innovation activity stage. The family’s long-term thrust and support benefit product development activities (Cassia et al., 2012). Continuity in the form of tradition has a positive effect on organizational learning and knowledge (De Massis et al., 2016b). While parsimony has a negative effect on the input stage, Lazzarotti (2013) shows in her single-case study how innovation investment is used efficiently in the context of an Italian micro-firm. According to conceptual arguments, the family’s unique resources positively influence innovation activities in family firms (Chrisman et al., 2015a). However, at the same time, some family factors, like family dynamics and close ties with others, may imply negative consequences for the family firm’s innovation process (Bennedsen & Foss, 2015). Furthermore, family goals influence not only the innovation input stages but also the innovation activity stage. Overall, family firms contain a high propensity to develop a familiness that benefits the family firm’s distinct way of innovating. However, whether the family’s values and attitudes lead to a competitive advantage for the firm depends not only on the family’s ability to exert its influence over the business, particularly via the implementation of certain decision premises, but also on the business’s willingness to accept and deem these decision premises relevant for the firm (Frank et al., 2016). 4.2.3. Family factors and the innovation output stage The present review identified a lack of empirical studies with a specific focus on the impact of family factors on innovation output. However, following the description of the innovation process, innovation output is the result of innovation input and innovation activities (Crossan & Apaydin, 2010). Consequently, any family factors that influence the innovation input and activity stages will indirectly influence the innovation output stage. Therefore, the family’s long-term orientation, risk-aversion, or aim for control may impact innovation investment decisions. The family’s collective orientation or the relationship to internal and external stakeholders may affect decisions concerning how these investments are converted to innovation output. Appendix A provides an overview of family factors and how they impact the various stages of the innovation process. The overview highlights how these family factors can have positive and/or negative influences on the various stages of the innovation process. 5. Discussion and conclusion 5.1. Conceptual framework: findings in light of the concept of familiness Using a systematic literature review, the present research aimed to deepen our understanding of the complexities involved in the innovation process among family businesses. As a result, the following conceptual framework was developed (Fig. 2). Building on previous frameworks applied in family business research (De Massis et al., 2013; Lumpkin et al., 2011), the framework highlights the input-activity-output nature of the innovation process. By drawing together the findings of both quantitative and qualitative studies, the review has demonstrated

I. Röd / Journal of Family Business Strategy 7 (2016) 185–201

197

Fig. 2. Conceptual framework of the family firm’s multi-staged innovation process.

how family firms differ from non-family firms along the various stages of this process. There are several indications that family firms not only invest less intensively in innovation but also follow different innovation investment strategies than do non-family firms and that they use distinct innovation activities to convert innovation input into output. This process is highly influenced by contextual factors that tend to be unique to family businesses and account for the unique way they innovate. These factors are expressed by the characteristics of the family system—the family factors—and are clustered for the proposed framework into family goals, family dynamics, attributes of family members, and a family’s attitude towards others. In conducting this review, it has become apparent that qualitative research provides largely empirical evidence of the family factors that influence innovation but that few of these factors have actually been operationalized and quantitatively measured. However, the accumulation of evidence allows us to draw a comprehensive picture of family factors and see that they have both positive and negative influences on the various stages of innovation. Furthermore, Duran et al.’s (2015) argument that both effects, lower innovation input and higher innovation output, are caused by the same set of family (firm) idiosyncrasies is empirically supported. While the family’s goals may lead to a reduced willingness to invest in high levels of R&D, the same goals may increase the family’s ability to innovate, leading to more efficient innovation activities and an increased innovation output. Further, some family characteristics can have both positive and negative effects on the same phase of the innovation process. The way in which these family factors impact the innovation process is dependent on additional contextual factors. Some of these factors, such as national and local conditions or the industry in question, do not necessarily differ between family and non-family firms. However, their impact on the innovation process may vary depending on family ownership, management, governance structures, or generational effects. In the present framework, these various relationships are denoted by arrows. As demonstrated in the overview, familiness rests in the structural coupling of the family and the enterprise system (Frank et al., 2010). Important factors that influence innovation can be allocated in the family system, while these factors manifest

themselves in the business system. A family’s long-term orientation, a propensity for parsimony, and enduring ties with stakeholders are decision premises that represent typical areas of influence a family has on its business. Families differ in size, values, and dynamics. Business families characterized by creativity and the love of experimentation will aim to transport these values into the business, leading to an innovation-oriented familiness and, thus, a highly innovative organization (Weismeier-Sammer, 2014). Therefore, along with other factors, the family’s heterogeneity also accounts for the family firm’s heterogeneity with respect to innovation. In light of the concept of familiness, we can conclude that which potential family-specific influencing factors on innovation come to have an effect will depend on the family’s decision premises. These premises mutually influence and are influenced by other contextual factors. As a result, family firm innovation can be considered a function of contextual and situational factors (Chrisman et al., 2015b), as well as of the familiness of the family firm. 5.2. Theoretical and methodical implications The present review suggests that the complex nature of family influence on innovation calls for a more holistic multi-faceted approach (Bennedsen & Foss, 2015) with respect to theory, methods, and measures. In terms of theoretical viewpoints, we see a trend towards the adoption of multiple theoretical approaches that complement each other (e.g., De Massis et al., 2015b). While this is a promising approach to capturing the complexities of family firm innovation, the present review has demonstrated that the concept of familiness from a new systems theory point of view offers a holistic approach to linking the family with the business system. The present review reveals that out of the 78 appraised studies, only one explicitly applied a social systems theory (Weismeier-Sammer, 2014) and one a family systems theory (Litz & Kleysen, 2001). In terms of method, more qualitative or multi-method research would help us to better understand the complex influencing factors and to answer the “how” and “why” questions that subsequently arise (De Massis et al., 2013). As this review has demonstrated, a purely quantitative comparison of ambidexterity might find that family firms are

198

I. Röd / Journal of Family Business Strategy 7 (2016) 185–201

either more or less prone to ambidexterity than are non-family firms. The qualitative study revealed that family firms apply ambidexterity in a completely different way than do their counterparts (Weismeier-Sammer, 2014). Finally, the multiple definitions and styles of operationalization of family business and innovation are a source of incongruent findings. While pluralism in research is commendable, especially given the heterogeneity of the topic, it should be clear what is being measured and compared at any one time. Studies that include various variables measuring different aspects of family influence and of innovation would add to a more comprehensive understanding (e.g., Classen et al., 2014; Schmid et al., 2014). 5.3. Contribution, limitations, and avenues for future research This review article has provided a comprehensive overview of the family firm’s multi-staged innovation process with special emphasis on the firm’s innovation activities. By incorporating empirically measured family factors that influence this process, it has described not merely the potential influence of families on innovation, but their actual concrete influence. Drawing on the theoretical perspective of new systems theory and the concept of familiness, this article provides a valuable contribution to both family business and innovation research. As an outcome, the family firm’s innovation process appears to be even more distinct than previously thought. The family and its influence on the business emerge as a double-edged sword that creates both advantages and disadvantages for this process. However, as families are able to develop their own familiness, they have the ability to actively manage their influence on innovation. Furthermore, family firms function according to their own rules and structures. Considering that family firms are the most natural and oldest form of economic institutions (Zachary, 2011), they seem to have developed unique ways of adapting to the requirements of the business environment, taking advantage of their own idiosyncratic characteristics. Finally, the review findings can support business practice, as family managers could benefit through increased awareness of the potential impact of family factors on their familiness, and hence innovation. This will enable them to control and manage their distinctive familiness more effectively by strengthening positive factors like family firm culture, their close ties to stakeholders, and their long-term orientation. On the other hand, they might find ways to overcome negative aspects of their familiness. Our quickly changing environment may require family firms to open up to change. Therefore, risk aversion might be overcome using riskminimizing innovation techniques. This can be done through the integration of customers at an early stage in the innovation process, the implementation of iterative innovation processes, or by spreading risk through simultaneous engagement in various innovation projects. It is important to recognize this literature-based research is not without limitations. First, the diversity of definitions of the family firm and its impact on the empirical results of the innovation process has been only partially addressed. Duran et al. (2015) tackle this issue by creating categories of family firms. Future research is thus encouraged to study the impact of the operationalization of the family firm not only on innovation input and output but also on innovation activities. Second, the present study does not clearly differentiate between the innovation creation and adoption processes. Finally, the present review does not include studies that focus on the family firm’s entrepreneurial orientation, as these studies only include innovativeness as a subdimension, making it difficult to consider this separately from the

whole construct as such. As this review has demonstrated, in recent years, family business research has made vast advances. Still, several promising research opportunities remain to be explored. 5.3.1. Research on the innovation process Research on the innovation input stage has mainly concentrated on family goals and how these connect with contextual factors to influence R&D decisions. Future research should consider additional factors, such as the skills of R&D personnel, individual resources, capabilities, or knowledge. In terms of innovation activities, innovation business processes like the family firm’s portfolio management, project management, or commercialization processes that lead to innovation are to date the least addressed topic (Padilla-Meléndez, Dieguez-Soto, & GarridoMoreno, 2015). Regarding the innovation output stage, research on different types and typologies of innovation such as process, administrative, service, social, or radical innovation should be encouraged. 5.3.2. Research on family factors influencing innovation With respect to family dynamics, little is known about how siblings and spouses, so-called “copreneurs,” interact and distribute their roles with respect to innovation. Regarding the role of family members, family business research tends to omit these individuals (Pieper & Klein, 2007), who are described in new systems theory as “persons” (Simon, 2012). Therefore, we know little about aspects like gender and how they influence innovation in family firms. Thus far, little to no attention has been paid to family members who do not take an active role in the firm’s governance or management, like the family manager’s spouse, who could be a driving force for or against innovation. Finally, when we look for answers as to why family firms are different, it is not enough to make implicit assumptions simply because reasons may have been cited in previous studies; they actually have to be measured. Therefore, it will be a future challenge for researchers to find ways in which to operationalize various aspects of the family and its influence on innovation. 5.3.3. General topics Given the heterogeneity of family firms, typologies of family business innovation might enhance our understanding of different approaches to innovation (Miller et al., 2015). A possible outcome of these typologies could be the definition of an “innovationoriented familiness” (Weismeier-Sammer, 2014; p. 112). Finally, an area of research that seems to have remained untouched thus far is how family firm innovation will affect the family system and change the family members’ goals, attitudes, and values across generations. This interesting research path would help us to understand more about transgenerational entrepreneurship and to gain insight into success factors and strategies of highly innovative family firms with a long life span. The aim of the present research was to bring more structure and light into the “black box” of innovation in family firms. Enhancing our understanding of this topic will benefit future research as well as practitioners. Acknowledgements I wish to thank Anita Van Gils and two anonymous reviewers for their constructive comments, as well as Hermann Frank and Julia Suess-Reyes for their suggestions to improve the paper.

I. Röd / Journal of Family Business Strategy 7 (2016) 185–201

199

Appendix A. Overview of family factors influencing the innovation stages Family factors

Family goals and behavior Long-term orientation and continuity Conservatism and risk-aversion Maintaining ownership and control Propensity for parsimony Monitoring power over managers Family dynamics Interplay between older and younger generation Collective orientation and strong family ties Conflict of interest and nepotism Attributes of family members Commitment, closeness to the firm and strong leadership Family’s attitude towards others Enduring ties with internal and external stakeholders and the community Closure to external environment

References Alberti, F. G., & Pizzurno, E. (2013). Technology, innovation and performance in family firms. International Journal of Entrepreneurship & Innovation Management, 17(1), 142–161. Aldrich, H. E., & Cliff, J. E. (2003). The pervasive effects of family on entrepreneurship: Toward a family embeddedness perspective. Journal of Business Venturing, 18(5), 573–596. Allison, T. H., McKenny, A. F., & Short, J. C. (2014). Integrating time into family business research: Using random coefficient modeling to examine temporal influences on family firm ambidexterity. Family Business Review, 27(1), 20–34. Ashwin, A., Krishnan, R., & George, R. (2015). Family firms in India: Family involvement, innovation and agency and stewardship behaviors. Asia Pacific Journal of Management, 32(4), 869–900. Astrachan, J. H., Klein, S. B., & Smyrnios, K. X. (2002). The F-PEC Scale of family influence: A proposal for solving the family business definition problem. Family Business Review, 15(1), 45–58. Bammens, Y., Notelaers, G., & Van Gils, A. (2015). Implications of family business employment for employees' innovative work involvement. Family Business Review, 28(2), 123–144. Beck, S., & Kenning, P. (2015). The influence of retailers’ family firm image on new product acceptance. An empirical investigation in the German FMCG market. International Journal of Retail & Distribution Management, 43(12), 1126–1143. Beck, L., Janssens, W., Debruyne, M., & Lommelen, T. (2011). A study of the relationships between generation, market orientation, and innovation in family firms. Family Business Review, 24(3), 252–272. Beneito, P., Rochina-Barrachina, M. E., & Sanchis-Llopis, A. (2014). Ownership and the cyclicality of firms' R&D investment. International Entrepreneurship and Management Journal, 11(2), 343–359. Bennedsen, M., & Foss, N. (2015). Family assets and liabilities in the innovation process. California Management Review, 58(1), 65–81. Bergfeld, M.-M. H., & Weber, F.-M. (2011). Dynasties of innovation: Highly performing German family firms and the owners' role for innovation. International Journal of Entrepreneurship & Innovation Management, 13(1), 80–94. Block, J. H., & Spiegel, F. (2013). Family firm density and regional innovation output: An exploratory analysis. Journal of Family Business Strategy, 4(4), 270–280. Block, J., Miller, D., Jaskiewicz, P., & Spiegel, F. (2013). Economic and technological importance of innovations in large family and founder firms: An analysis of patent data. Family Business Review, 26(2), 180–199. Block, J. H. (2012). R&D investments in family and founder firms: An agency perspective. Journal of Business Venturing, 27(2), 248–265. Bogers, M., Boyd, B., & Hollensen, S. (2015). Managing Turbulence: Business model development in a family-owned airline. California Management Review, 58(1), 41–64. Brines, S., Shepherd, D., & Woods, C. (2013). SME family business innovation: Exploring new combinations. Journal of Family Business Management, 3(2), 117– 135. Carnes, C. M., & Ireland, R. D. (2013). Familiness and innovation: Resource bundling as the missing link. Entrepreneurship Theory and Practice, 37(6), 1399–1419. http://dx.doi.org/10.1111/etap.12073. Cassia, L., De Massis, A., & Pizzurno, E. (2011). An exploratory investigation on NPD in small family businesses from Northern Italy. International Journal of Business, Management and Social Science, 2(2), 1–14. Cassia, L., De Massis, A., & Pizzurno, E. (2012). Strategic innovation and new product development in family firms. An empirically grounded theoretical framework. International Journal of Entrepreneurial Behavior & Research, 18(2), 198–232.

Influence on innovation stage (+/ ) Innovation input

Innovation activity

+ – +/ –

+

+/ –

Innovation output Factors that influence the innovation input and activity stage will indirectly influence the innovation output stage

+ +/

+/ – +

–

+ +/

Chang, S.-C., Wu, W.-Y., & Wong, Y.-J. (2010). Family control and stock market reactions to innovation announcements. British Journal of Management, 21(1), 152–170. Chen, H.-L., & Hsu, W.-T. (2009). Family ownership, board independence, and R&D investment. Family Business Review, 22(4), 347–362. Chen, V. Y. S., Tsao, S.-M., & Chen, G.-Z. (2013). Founding family ownership and innovation. Asia Pacific Journal of Accounting & Economics, 20(4), 429–456. Chin, C.-L., Chen, Y.-J., Kleinman, G., & Lee, P. (2009). Corporate ownership structure and innovation: Evidence from Taiwan's electronics industry, Journal of Accounting. Auditing & Finance, 24(1), 145–174. Chirico, F., & Salvato, C. (2016). Knowledge internalization and product development in family firms: When rational and affective factors matter. Entrepreneurship Theory & Practice, 40(1), 201–229. Choi, Y. R., Zahra, S. A., Yoshikawa, T., & Han, B. H. (2015). Family ownership and R&D investment: The role of growth opportunities and business group membership. Journal of Business Research, 68(5), 1053–1061. Chrisman, J. J., & Patel, P. C. (2012). Variations in R&D investments of family and nonfamily firms: Behavioral agency and myopic loss aversion perspectives. Academy of Management Journal, 55(4), 976–997. Chrisman, J. J., Chua, J. H., De Massis, A., Frattini, F., & Wright, M. ([220_TD$DIFF] 2015a). The ability and willingness paradox in family firm innovation. Journal of Product Innovation Management, 32(3), 310–318. Chrisman, J. J., Fang, H., Kotlar, J., & De Massis, A. (2015b). A note on family influence and the adoption of discontinuous technologies in family firms. Journal of Product Innovation Management, 32(3), 384–388. Chua, J. H., Chrisman, J. J., & Sharma, P. (1999). Defining the family business by behavior. Entrepreneurship Theory and Practice, 23, 19–39. Classen, N., Van Gils, A., Bammens, Y., & Carree, M. (2012). Accessing resources from innovation partners: The search breadth of family SMEs. Journal of Small Business Management, 50(2), 191–215. Classen, N., Carree, M., Van Gils, A., & Peters, B. (2014). Innovation in family and nonfamily SMEs: An exploratory analysis. Small Business Economics, 42(3), 595–609. Craig, J., & Dibrell, C. (2006). The natural environment, innovation, and firm performance: A comparative study. Family Business Review, 19(4), 275–288. Craig, J. B., Dibrell, C., & Garrett, R. (2014a). Examining relationships among family influence, family culture, flexible planning systems, innovativeness and firm performance. Journal of Family Business Strategy, 5(3), 229–238. Craig, J. B., Pohjola, M., Kraus, S., & Jensen, S. H. (2014b). Exploring relationships among proactiveness, risk-taking and innovation output in family and nonfamily firms. Creativity and Innovation Management, 23(2), 199–210. Crossan, M. M., & Apaydin, M. (2010). A multi-dimensional framework of organizational innovation: A systematic review of the literature. Journal of Management Studies, 47(6), 1154–1191. Cucculelli, M., Le Breton-Miller, I., & Miller, D. (2016). Product innovation, firm renewal and family governance. Journal of Family Business Strategy, 7(2), 90–104. Cucculelli, M. (2013). Product innovation and firm's growth in family firms: A quantile regression approach. International Journal of Entrepreneurship and Innovation Management, 17(1/2/3), 124–141. Damanpour, F. (1991). Organizational innovation: A meta-analysis of effects of determinants and moderators. Academy of Management Journal, 34(3), 555–590. http://dx.doi.org/10.2307/256406. De Massis, A., Frattini, F., & Lichtenthaler, U. (2013). Research on technological innovation in family firms: Present debates and future directions. Family Business Review, 26(1), 10–31. De Massis, A., Di Minin, A., & Frattini, F. (2015a). Family-Driven Innovation: Resolving the paradox in family firms. California Management Review, 58(1), 5– 19.

200

I. Röd / Journal of Family Business Strategy 7 (2016) 185–201

De Massis, A., Frattini, F., Pizzurno, E., & Cassia, L. (2015b). Product innovation in family versus nonfamily firms: An exploratory analysis. Journal of Small Business Management, 53(1), 1–36. De Massis, A., Kotlar, J., Frattini, F., Chrisman, J. J., & Nordqvist, M. (2016a). Family governance at work: Organizing for new product development in family SMEs. Family Business Review, 29(2), 189–213. De Massis, A., Frattini, F., Kotlar, J., Messeni Petruzzelli, A., & Wright, M. (2016b). Innovation through tradition: Lessons from innovative family businesses and directions for future research. Academy of Management Perspectives, 30(1), 93– 116. Dibrell, C., & Moeller, M. (2011). The impact of a service-dominant focus strategy and stewardship culture on organizational innovativeness in family-owned businesses. Journal of Family Business Strategy, 2(1), 43–51. Duran, P., Kammerlander, N., Van Essen, M., & Zellweger, T. (2015). Doing more with less: Innovation input and output in family firms. Academy of Management Journal [Advance online publication]. Frank, H., Lueger, M., Nosé, L., & Suchy, D. (2010). The concept of Familiness: Literature review and systems theory-based reflections. Journal of Family Business Strategy, 1(3), 119–130. Frank, H., Kessler, A., Rusch, T., Suess-Reyes, J., & Weismeier-Sammer, D. (2016). Capturing the familiness of family businesses: Development of the family influence familiness scale (FIFS). Entrepreneurship Theory & Practice [Advance online publication]. Gómez-Mejía, L. R., Haynes, K. T., Núñez-Nickel, M., Jacobson, K. J. L., & MoyanoFuentes, J. (2007). Socioemotional wealth and business risks in familycontrolled firms: Evidence from Spanish olive oil mills. Administrative Science Quarterly, 52(1), 106–137. Gómez-Mejía, L. R., Campbell, J. T., Martin, G., Hoskisson, R. E., Makri, M., & Sirmon, D. G. (2014). Socioemotional wealth as a mixed gamble: Revisiting family firm R&D investments with the behavioral agency model. Entrepreneurship Theory and Practice, 38(6), 1351–1374. Grundström, C., Öberg, C., & Öhrwall Rönnbäck, A. (2011). View and management of innovativeness upon succession in family-owned SMEs. International Journal of Innovation Management, 15(3), 617–640. Grundström, C., Öberg, C., & Öhrwall Rönnbäck, A. (2012). Family-owned manufacturing SMEs and innovativeness: A comparison between within-family successions and external takeovers. Journal of Family Business Strategy, 3(3), 162–173. Gudmundson, D., Tower, C. B., & Hartman, E. A. (2003). Innovation in small businesses: Culture and ownership structure do matter. Journal of Developmental Entrepreneurship, 8(1), 1–17. Hauck, J., & Prügl, R. (2015). Innovation activities during intra-family leadership succession in family firms: An empirical study from a socioemotional wealth perspective. Journal of Family Business Strategy, 6(3), 104–118. Helfat, C. E., Finkelstein, S., Mitchell, W., Peteraf, M. A., Singh, H., Teece, D. J., & Winter, S. G. (2007). Dynamic capabilities: Understanding strategic change in organizations. Oxford: Blackwell Publishing. Hiebl, M. R. W. (2015). Family involvement and organizational ambidexterity in later-generation family businesses: A framework for further investigation. Management Decision, 53(5), 1061–1082. Holt, D. T., & Daspit, J. J. (2015). Diagnosing innovation readiness in family firms. California Management Review, 58(1), 82–96. Hsu, L.-C., & Chang, H.-C. (2011). The role of behavioral strategic controls in family firm innovation. Industry & Innovation, 18(7), 709–727. Ingram, A. E., Lewis, M. W., Barton, S., & Gartner, W. B. (2016). Paradoxes and innovation in family firms: The role of paradoxical thinking. Entrepreneurship Theory and Practice, 40(1), 161–176. Kammerlander, N., & Ganter, M. (2015). An attention-based view of family firm adaptation to discontinuous technological change: Exploring the role of family CEOs' noneconomic goals. Journal of Product Innovation Management, 32(3), 361–383. Kammerlander, N., Dessì, C., Bird, M., Floris, M., & Murru, A. (2015). The impact of shared stories on family firm innovation. Family Business Review, 28(4), 332– 354. Kashmiri, S., & Mahajan, V. (2014). A rose by any other name: Are family firms named after their founding families rewarded more for their new product introductions? Journal of Business Ethics, 124(1), 81–99. Kellermanns, W., Eddleston, K. A., Sarathy, R., & Murphy, F. (2012). Innovativeness in family firms: A family influence perspective. Small Business Economics, 38(1), 85–101. Kim, H., Kim, H., & Lee, P. M. (2008). Ownership structure and the relationship between financial slack and R&D investments: Evidence from Korean firms. Organization Science, 19(3), 404–418. Kotlar, J., De Massis, A., Frattini, F., Bianchi, M., & Fang, H. (2013). Technology acquisition in family and nonfamily firms: A longitudinal analysis of Spanish manufacturing firms. Journal of Product Innovation Management, 30(6), 1073– 1088. Kotlar, J., Fang, H., De Massis, A., & Frattini, F. (2014). Profitability goals, control goals, and the R&D investment decisions of family and nonfamily firms. Journal of Product Innovation Management, 31(6), 1128–1145. Kraiczy, N. D., Hack, A., & Kellermanns, F. W. (2014). New product portfolio performance in family firms. Journal of Business Research, 67(6), 1065–1073. Kraiczy, N. D., Hack, A., & Kellermanns, F. W. (2015). What makes a family firm Innovative? CEO risk-taking propensity and the organizational context of family firms. Journal of Product Innovation Management, 32(3), 334–348.

Kraus, S., Pohjola, M., & Koponen, A. (2012). Innovation in family firms: An empirical analysis linking organizational and managerial innovation to corporate success. Review of Managerial Science, 6(3), 265–286. Laforet, S. (2013). Innovation characteristics of young and old family-owned businesses. Journal of Small Business and Enterprise Development, 20(1), 204–224. Lazzarotti, V. (2013). Photovoltaic-technology adoption: Emerging peculiarities in an Italian micro-family firm. International Journal of Entrepreneurship and Innovation Management, 17(1/2/3), 28–53. Liang, Q., Li, X., Yang, X., Lin, D., & Zheng, D. (2013). How does family involvement affect innovation in China? Asia Pacific Journal of Management, 30(3), 677–695. Litz, R. A., & Kleysen, R. F. (2001). Your old men shall dream dreams, your young men shall see visions: Toward a theory of family firm innovation with help from the Brubeck family. Family Business Review, 14(4), 335–352. Llach, J., & Nordqvist, M. (2010). Innovation in family and non-family businesses: A resource perspective. International Journal of Entrepreneurial Venturing, 2(3/4), 381–399. Llach, J., Marquès, P., Bikfalvi, A., Simon, A., & Kraus, S. (2012). The innovativeness of family firms through the economic cycle. Journal of Family Business Management, 2(2), 96–109. Lodh, S., Nandy, M., & Chen, J. (2014). Innovation and family ownership: Empirical evidence from India. Corporate Governance: An International Review, 22(1), 4–23. Luhmann, N. (1995). Social systems. Stanford, CA: Stanford University Press. Lumpkin, G. T., & Dess, G. G. (1996). Clarifying the entrepreneurial orientation construct and linking it to performance. Academy of Management Review, 21(1), 135–172. Lumpkin, G. T., Steier, L., & Wright, M. (2011). Strategic entrepreneurship in family business. Strategic Entrepreneurship Journal, 5(4), 285–306. Matzler, K., Veider, V., Hautz, J., & Stadler, C. (2015). The impact of family ownership, management, and governance on innovation. Journal of Product Innovation Management, 32(3), 319–333. McAdam, R., Reid, R., & Mitchell, N. (2010). Longitudinal development of innovation implementation in family-based SMEs. The effects of critical incidents. International Journal of Entrepreneurial Behavior & Research, 16(5), 437–456. Memili, E., Fang, H. C., & Welsh, D. H. B. (2015). Value creation and value appropriation in innovation process in publicly-traded family firms. Management Decision, 53(9), 1921–1952. Miller, D., Wright, M., Le Breton-Miller, I., & Scholes, L. (2015). Resources and innovation in family businesses: The Janus-Face of socioemotional preferences. California Management Review, 58(1), 20–40. Muñoz-Bullón, F., & Sanchez-Bueno, M. J. (2011). The impact of family involvement on the R&D intensity of publicly traded firms. Family Business Review, 24(1), 62– 70. Munari, F., Oriani, R., & Sobrero, M. (2010). The effects of owner identity and external governance systems on R&D investments: A study of Western European firms. Research Policy, 39(8), 1093–1104. Nieto, M. J., Santamaria, L., & Fernandez, Z. (2015). Understanding the innovation behavior of family firms. Journal of Small Business Management, 53(2), 382–399. O’Reilly, C. A., & Tushman, M. L. (2004). The ambidextrous organization. Harvard Business Review, 81, 140. Padilla-Meléndez, A., Dieguez-Soto, J., & Garrido-Moreno, A. (2015). Empirical research on innovation in family business: Literature review and proposal of an integrative framework. Review of Business Management, 17(56), 1064–1089. Patel, P. C., & Chrisman, J. J. (2014). Risk abatement as a strategy for R&D investments in family firms. Strategic Management Journal, 35(4), 617–627. Patel, P. C., & Fiet, J. O. (2011). Knowledge combination and the potential advantages of family firms in searching for opportunities. Entrepreneurship Theory and Practice, 35(6), 1179–1197. Pieper, T. M., & Klein, S. B. (2007). The bulleye: A systems approach to modeling family firms. Family Business Review, 20(4), 301–319. Pittino, D., & Visintin, F. (2009). Innovation and strategic types of family SMEs. A test and extension of Miles and Snow’s configurational model. Journal of Enterprising Culture, 17(3), 257–295. Pittino, D., Visintin, F., Bau', M., & Mazzurana, P. (2013). Collaborative technology strategies and innovation in family firms. International Journal of Entrepreneurship & Innovation Management, 17(1/2/3), 8–27. Porter, M. E. (1980). Competitive strategy: Techniques for analyzing industries and competitors. New York: Free Press. Sanchez-Famoso, V., Maseda, A., & Iturralde, T. (2014). The role of internal social capital in organisational innovation. An empirical study of family firms. European Management Journal, 32(6), 950–962. Schmid, T., Achleitner, A.-K., Ampenberger, M., & Kaserer, C. (2014). Family firms and R&D behavior New evidence from a large-scale survey. Research Policy, 43(1), 233–244. Schumpeter, J. A. ([240_TD$DIFF]1934). The theory of economic development. An inquiry into profits, capital, credit, interest, and the business cycle. Cambridge: Harvard University Press. Sciascia, S., Nordqvist, M., Mazzola, P., & De Massis, A. (2015). Family ownership and R&D intensity in small- and medium-sized firms. Journal of Product Innovation Management, 32(3), 349–360. Sharma, P., & Salvato, C. (2011). Commentary: Exploiting and exploring new opportunities over life cycle stages of family firms. Entrepreneurship Theory and Practice, 35(6), 1199–1205. Simon, F. B. (2012). Einfu¨hrung in die Theorie des Familienunternehmens. Heidelberg, Germany: Carl-Auer Verlag.

I. Röd / Journal of Family Business Strategy 7 (2016) 185–201 Sirmon, D. G., Arregle, J.-L., Hitt, M. A., & Webb, J. W. (2008). The role of family influence in firms' strategic responses to threat of imitation. Entrepreneurship Theory and Practice, 32(6), 979–998. Spriggs, M., Yu, A., Deeds, D., & Sorenson, R. L. (2013). Too many cooks in the kitchen: Innovative capacity, collaborative network orientation, and performance in small family businesses. Family Business Review, 26(1), 32–50. Stubner, S., Blarr, H. W., Brands, C., & Wulf, T. (2012). Organizational ambidexterity and family firm performance. Journal of Small Business & Entrepreneurship, 25(2), 217–229. Suess, J. (2014). Family governance – Literature review and the development of a conceptual model. Journal of Family Business Strategy, 5(2), 138–155. Tranfield, D., Denyer, D., & Smart, P. (2003). Towards a methodology for developing evidence-informed management knowledge by means of systematic review. British Journal of Management, 14(3), 207–222. Tsao, S.-M., & Lien, C.-H. (2013). Family management and internationalization: The impact on firm performance and innovation. Management International Review (MIR), 53(2), 189–213.

201

Tsao, S.-M., Lin, W.-H., & Chen, V. Y. S. (2015). Family ownership as a moderator between R&D investments and CEO compensation. Journal of Business Research, 68(3), 599–606. Von Schlippe, A., & Frank, H. (2013). The theory of social systems as a framework for understanding family businesses. Family Relations, 62(3), 384–398. http://dx. doi.org/10.1111/fare.12010. Wagner, M. (2010). Corporate social performance and innovation with high social benefits: A quantitative analysis. Journal of Business Ethics, 94(4), 581–594. Weismeier-Sammer, D. (2014). The role of familiness for family business innovativeness. International Journal of Entrepreneurial Venturing, 6(2), 101–117. Yoo, T., & Sung, T. (2015). How outside directors facilitate corporate R&D investment? Evidence from large Korean firms. Journal of Business Research, 68 (6), 1251–1260. Zachary, R. K. (2011). The importance of the family system in family business. Journal of Family Business Management, 1(1), 26–36.