The role of family involvement in fostering an innovation-supportive stewardship culture

Abstract

The last few decades have seen a substantial increase in scholarly attention devoted to family firms. This interest is more than appropriate given the dominance of family firms as an organizational form, especially among privately-held SMEs, and their significant contribution to economies across the globe(IFERA, 2003). Hitherto, family business scholars have been preoccupied with issues of continuity (e.g. succession and governing boards) more so than with issues of renewal(e.g. entrepreneurship and innovation)(Zahra & Sharma, 2004). Yet business organizations operate in dynamic and competitive environments that are increasingly characterized by rapid and discontinuous change. (Hitt, 2000). In order to safeguard the competitiveness of their firm, business leaders must respond to these changes by investing in innovation and exploiting the opportunities that arise in such changing environments(Sirmon et al., 2007). In view of that, it is important to develop a deeper understanding of the relationship between family involvement and the firm's innovation capacity(Gudmundson et al., 2003). The purpose of this study is to present a theoretical model on the relationship between family involvement and technological innovation(i.e. process and product innovation), and to test derived hypotheses using a sample of privately-held manufacturing SMEs. We use a stewardship-theoretic lens and insights drawn from the innovation, self-determination and family business literatures to develop a theoretical model outlining how and when family involvement facilitates the intra-organizational process. By extracting themes from stewardship-theoryy (Davis et al., 1997) we propose the notion of a stewardship culture consisting of three dimensions: an autonomous orientation, a high-trust orientation, and a collective orientation. These three cultural dimensions will be related to the idea generation phase, the idea dissemination phase, and the idea realization phase, respectively, of the innovation process. Then, based on self-determination theory and the family business literature, we explain how the social conditions prevailing in different generational forms of family firms and their nonfamily counterparts may foster versus thwart this innovation-supportive stewardship culture. This article thus concentrates on the relationships between family involvement, organizational culture, and the entrepreneurial dimension of innovation. In the next section, we develop our theoretical model and derive hypotheses from it. After that, we describe our exploratory empirical study and present its results.