Innovation in family firm from developing countries: the role of ‘Familiness’
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Date
01/07/2015Author
Lopez Gomez, Sara Jimena
Metadata
Abstract
Family in business and innovation are considered vital for firm performance and
economic growth. Scholars claim that studying this relationship is important, as there
are ‘strong theoretical reasons’ to believe that a firm’s innovation, hence firm
performance, is positively and/or negatively influenced by the family. Research on
the interception of the two fields is growing in developed countries, but is still
nascent in developing country contexts. Hence, this study seeks to explore and
further existing knowledge on this relationship in such a context.
This investigation’ explores how family influences the firm’s innovation activities. It
explores particularly the concept of ‘familiness’, which depicts those resources
unique to a firm due to the involvement of the family members. Two approaches to
‘familiness’ are adopted, dimensions and resources. Concerning dimensions, three
characteristics: components of involvement, essence and organisational identity were
explored. The resources approach in this study includes four elements: financial,
physical, human and social. In addition to this, the positive or negative nature of the
family influence on each resource is considered. These two approaches of
‘familiness’ serves as the theoretical lens for understanding innovation
comprehensively by taking into account the types, magnitudes, strategies and
sources.
This study adopted a qualitative approach to explore this phenomenon. Data were
collected from six Colombian family firms through a self-administered
questionnaire, followed by in-depth semi-structured interviews with family and nonfamily
members in the form of a multi-case study design within purposefully
selected firms. Triangulation was achieved by using different sources of information,
such as documents, catalogues, newspapers, websites, and academic case studies.
Due to the deductive and inductive nature of this study, data were explored and
thematically analysed by coding into pre-existing categories suggested by the initial
conceptual framework, while new themes emerged from the data. Results showed that when all three ‘familiness’ dimensions are present, there is an
impact on the innovation activities within family firms. With respect to resources, the
study highlighted the importance of the family influence on the firm’s human
resource, and its impact on organisational innovation. This is particular the case
when non-family members are more involved in top management teams. An
intriguing finding is the relationship between the family’s foreign background and its
influence of the firm’s overall innovation activities. In addition to this, by viewing
the findings in this study as a whole, it is demonstrated that family firms in
developing countries are innovative, which is contrary to existing studies on this
subject area. Furthermore, it is advocated that this phenomenon would be better
understood and further captured through the entrepreneurship lens. Hence, this is in
line with recent views calling for a closer interception of family business and
entrepreneurship. This study addresses these issues by weaving in Schumpeter’s
‘creative destruction’ and Kirzner’s ‘entrepreneurial discovery’ approaches to
innovation to reconciliate inconsistent findings in the field of ‘innovation and family
firms’. This is due to all firm’s engaging in innovative activities in an incremental
(Kirznerian) nature, as opposed to a ‘radical’ (Schumpeterian) one, whereby the
latter has been the main focus of previous studies.
This thesis advocates the need for public and private institutions to implement family
business and innovation courses at various levels throughout the country, in order to
enable young generations to be expose to the challenges and opportunities that
globalisation brings to developing economies. The study highlights the importance
of exploring this phenomenon using the family itself as the unit of analysis, as
opposed to the firm, in order to move the field forwards. Future research should test
the conceptual framework that emerged from this study, both qualitatively and
quantitatively, in family firms from other industries, and context within Latin
America or beyond.