Innovation in Family Business

Innovation in Family Business: Current Trends and Future Research Directions

Antonio Padilla Meléndez ([email protected]) Julio Diéguez Soto ([email protected]) Aurora Garrido Moreno ([email protected]) Universidad de Málaga


Antonio Padilla Meléndez ([email protected]) Julio Diéguez Soto ([email protected]) Aurora Garrido Moreno ([email protected]) Universidad de Málaga

Types of firms

Agency Agency Effect on Problem Problem performance(*) I II

Group I Lone founder

No

No

+

Co-preneurial FB

Low

Low

+

Dispersed Non-Professional FB

Low

Low

+

Low

High

?

Dispersed Professional FB

High

Low

?

Dispersed Non-Family Business

High

Low

?

Concentrated Non-Family Business

High

High

-

Concentrated Professional FBs

High

High

-

Group II Solely Family Run FB Group III

Group IV

Table 4 Results of difference of Means Tests excluding lone founder from the analysis (2007) Variables /Tests

Family owned –non family owned firms

ConcentratedDispersed FBs

Family CEO firms and nonfamily owned firms

Family and nonfamily CEO firms

LF LF LF LF LF LF LF LF included excluded included excluded included excluded included excluded

3 4

Log AGE Log SIZE DEBT ROA1

5 6 7

1 2

≠

=

≠

≠

≠

=

≠

≠

≠

≠

≠

≠

≠

=

≠

≠

≠ ??

= =

≠ =

?? ??

≠ ≠

≠ =

?? ≠

= ??

ROA2

≠

=

=

??

≠

=

≠

??

ROA3 ROE

≠ ≠

= =

= =

= =

≠ ≠

= =

≠ ≠

≠ ??

(*) ≠ means significant differences at 1%***, 5%** or 10% *level; = means there are not significant differences; ?? means we have some doubts about whether exist or not differences. (*) The summary statistics for year 2006 are not shown because they are very similar.

Table 5 Difference of Means Tests between lone founder firms and Family owned firms (2007) Lone Founder Sig Family owned Sig(t Conclusi (Mannon (N=865) Firms (N=923) student) Whitney) Mean

Standard Deviation

1 Log AGE 2.49 0.67 2 Log SIZE 7.79 1.66 3 DEBT 0.70 0.21 4 ROA1 0.05 0.05 5 ROA2 0.07 0.07 6 ROA3 0.11 0.08 7 ROE 0.19 0.20 (*) ≠ means significant differences.

Mean

Standard Deviation

2.85 8.88 0.65 0.04 0.06 0.10 0.13

0.61 1.90 0.21 0.04 0.06 0.07 0.16

0.000 0.000 0.000 0.000 0.002 0.003 0.000

0.000 0.000 0.000 0.001 0.004 0.028 0.000

≠ ≠ ≠ ≠ ≠ ≠ ≠

(*) The summary statistics for year 2006 are not shown because they are very similar

Table 6 Descriptive Statistics (2007) Type/Variables

Total

%

Log AGE

Log SIZE

DEBT

ROA1

ROA2

ROA3

ROE1

Lone Founder

931

26.41

2.47

7.73

0.71

0.06

0.07

0.11

0.19

Co-preneurial FB

145

4.11

2.67

8.11

0.69

0.05

0.06

0.10

0.15

Solely Family Run FB

675

19.15

2.84

8.84

0,66

0.05

0.07

0.10

0.14

Dispersed nonprofessional FB

29

0.82

3.17

10.13

0.58

0.07

0.09

0.12

0.15

Concentrated Professional FB

108

3.06

2.96

9.57

0.66

0.04

0.05

0.08

0.10

Dispersed professional FB

2

0.06

2.90

9.70

0.59

0.07

0.08

0.20

0.17

1,635

46.38

2.82

9.83

0.66

0.05

0.06

0.10

0.13

Total 3,525 100.00 2.73 9.01 0.68 0.05 0,06 (*) The summary statistics for year 2006 are not shown because they are very similar.

0.10

0.15

Non family-firms

Table 8 Performance and control variables: varimax rotated components Varimax rotated components 2007 Varimax rotated components 2006

Variables log AGE log SIZE DEBT ROA1 ROA3

1 2 -0.087 0.432 -0.059 0.978 -0.171 -0.001 0.827 -0.018 0.835 -0.118

3 -0.523 -0.051 0.944 -0.127 -0.153

1 -0.087 0.052 -0.244 0.852 0.863

2 0.432 0.980 0.020 0.011 -0.079

3 -0.523 -0.028 0.924 -0.026 -0.110

Research motivation (Why?)


Research motivation (Why?) §  Innovation important for Family Business (FB). Very

scarce attention to that topic in the FB literature.

§  Many calls have been made for further research in

this area.

Not conclusive evidence/theory about it relationships. § 

§  Aims of this paper: §  To identify, summarize and organize the main research streams in the literature about innovation and FB. §  To propose future integrated research lines. Innovation in Family Business: Current Trends and Future Research Directions

Theoretical Background. Concepts §  Innovation: Doing things differently / new process or/and new outcome. §  Innovativeness: Firm’s tendency to engage in and support new ideas, novelty, experimentation, and creative processes that may result in new products, services, or technological processes” (Lumpkin & Dess, 1996). §  Family Business: A firm where is probed the family involvement through ownership, governance or management.


Methodology (How?) Extensive literature review (til December 2011) with three parts: 1.  Data collection 2.  Data analysis 3.  Synthesis


Results Three different dimensions were found: 1.  Family Involvement affecting innovation 2.  Entrepreneurial Orientation in Family Business 3.  Factors affecting innovation in Family Business


Contributions §  There main research lines in the literature: 1.  Family involvement 2.  EO 3.  Factors affecting innovation

§  Four main future research lines have being proposed: 1.  FB specific characteristics influencing innovation 2.  Linkages between innovation in FBs and variables such firm performance and growth 3.  Measuring innovation properly 4.  Development of green innovations


Limitations 1.  Some relevant papers may exist and they have not been included in the analysis. 2.  The definition of FB remains unclear, consequently the conclusions reached might be affected by the limitation regarding this concept.
