Family firms and the paradox of stability and change

Abstract

The current rapid changing economy calls for firms that are able to successfully change the way work is organized. Successful organizational innovation requires that family firms are able to see and respond to new directions for the firm while at the same time acknowledging what has made the firm successful so far (Poza, 2007). As such, successful organizational innovation requires combining the search for change and stability. To date, the question how family firms can achieve this, remains largely unanswered (e.g. Hatum and Pettigrew, 2004). We argue that stability and change are not necessarily incompatible in family firms, but rather mutually enabling (Farjoun, 2010). With this view in mind, we present a cyclical process model that links the mechanisms for change with the mechanisms for stability and hereby show how family firms combine the search for stability and change. We argue how social capital is the key process motor herein, aided by two formal moderators, namely family institutions and the board of directors.