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Innovation in family firms - Coggle Diagram
Innovation in family firms
Common belief
Family firms do not take risks
Family firms only innovate incrementally
Family firms do not innovate
Incentives
Authority (because there is uncertainty in innovation)
Accountability (sometimes family firms do not disclosure => it affects also the innovation because for it you need network)
Technology acquisitions in family firm
Family involvement reduces the strenght of the relationship between external technology (negative correlation)
But when the mechanism are strong the negative relation becomes insignificant
External technology acquisitions:
Other parties in product innovation
Benefits of new combinations of product :smiley:
Contractual agreement (RD outsorcing, in license, join ventures)
Increased innovativeness :smiley:
Weaker property rights :unamused:
Limited capacity to appropriate value :unamused:
New entrants and lower control :unamused:
Temporal evolution of innovation in FFs
Differences in the product innovation process betwwen FB and non Family SME
Climate
Family: risk avverse and low formalization
Non family_ risk taking and hight formalization
Organization
Family: functional orgization, high decisional autonomy
Non family: cross functional teams and low decisional autonomy
Strategy
Family: open approach, incremental innovation
Non family: incremental and radical innovation, closed approach
The family firm innovation paradox
Low willingness
High ability
To solve the paradox: the heterogeneity of family firms should fit the heterogeneity of innovation
Proactiveness
is a firm level capability to anticipate economic trends apart of day to day routine:
the more proactive firms are the younger, then the proactiveness decreases
Phase 1:
because of diversity of goals the proactiveness decreases
Phase 2
: at the minimum point reached in phase 2 the company understands that must change and must forecast the futurre
Phase 3: they grow again
The more a family controls firm ownership, the less the SME is inclined to invest in R&D (protective behaviour) and viceversa