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Innovation processes in family firms: the relevance of organizational flexibility

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Abstract

The current study attempts to broaden our understanding of the processes underlying successful innovation in family firms by studying not only research and development (R&D) but also organizational flexibility as drivers of innovation performance. Building on existing theoretical and empirical work, we formulate hypotheses on the relationship between family ownership and R&D and organizational flexibility, and on how this translates into successful innovation. Using a sample of 2604 firms and 3140-year observations, we find that family firms engage less in R&D, but are more flexible in the way they organize and that this organizational flexibility enables them to successfully develop new products and even outperform non-family owned businesses when it comes to process innovation. This research contributes to the family business field by disentangling R&D and organizational flexibility as processes underlying the relationship between family ownership and innovation performance. It illustrates how family firms’ organizational flexibility can result in an innovation advantage and thereby has important implications for practitioners.

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Notes

  1. Although our measure shares similarities with process innovation, it is important and relevant to distinguish the two as this yields a more nuanced and complete approach to the study of innovation. Both the CIS survey and the Oslo Manual go to considerable lengths to explicitly explain the difference between organizational flexibility (which CIS labels ‘organizational innovation’) and process innovation. Among other things, the Oslo Manual notes that “A starting point for distinguishing process and/or organizational innovations is the type of activity: process innovations deal mainly with the implementation of new equipment, software and specific techniques or procedures, while organizational innovations deal primarily with people and the organization of work.” (OECD 2005, p. 55). Additionally, the survey respondents are presented with extensive definitions and examples.

  2. Whereas 69 % of the product innovators in our CIS6 subsample developed their product innovations without the help of external partners, this was only the case for 32 % of the process innovators.

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Authors and Affiliations

  1. Department of Business Science, Research Center for Entrepreneurship Odisee (SVO), KU Leuven Association, Warmoesberg 26, 1000, Brussels, Belgium

    Wouter Broekaert

  2. Faculty of Economics and Business Administration, Ghent University, Tweekerkenstraat 2, 9000, Ghent, Belgium

    Petra Andries

  3. KU Leuven Research and Development, KU Leuven, Minderbroedersstraat 8A, Box 5105, 3000, Louvain, Belgium

    Koenraad Debackere

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  1. Wouter Broekaert
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Broekaert, W., Andries, P. & Debackere, K. Innovation processes in family firms: the relevance of organizational flexibility. Small Bus Econ 47, 771–785 (2016). https://doi.org/10.1007/s11187-016-9760-7

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