Mastering Innovation in Family Firms: How to Resolve the Ability vs. Willingness Paradox

familyfirminnovation

By Alfredo De Massis and Federico Frattini

Family firms represent a highly ubiquitous form of business organisation globally and are the backbone of many industrialised and developing world economies. This article discusses how can family firm managers use Family-Driven Innovation and unlock the innovation potential of the organisations in which they work.

 

Family firms are businesses “governed and/or managed with the intention to shape and pursue the vision of the business held by a dominant coalition controlled by members of the same family or a small number of families in a manner that is potentially sustainable across generations of the family or families” (Chua et al., 1999). Family firms represent a highly ubiquitous form of business organisation globally and are the backbone of many industrialised and developing world economies (Villalonga and Amit, 2009).

From decades of theoretical and empirical research (e.g., De Massis et al., 2012), we know that family firms have a highly distinctive behaviour in areas such as internationalisation, entrepreneurship, diversification, financing. This peculiar behaviour – which differs from that of non-family businesses – stems from the involvement of one or more controlling families in ownership and management structures and their orientation to ensure sustainability of the business across generations. This has profound impacts on the choice of the organisational goals to be pursued (Kotlar and De Massis, 2013), the level of acceptable risk in strategic choices (Gómez-Mejía et al., 2007), and the length of the time horizons along which investment decisions are evaluated (Lumpkin and Brigham, 2011).

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