Nurturing Innovation in Family Firms: The Influence of Managerial and Family Characteristics

Abstract

This study examines the influence of managerial and family characteristics on three types of innovation in family firms, namely product, process and organizational innovation. The hypotheses are based on the main premises of trait-based theory, upper-echelon, resource-based and agency perspectives. While the empirical results illustrate that managerial and family characteristics are not the main antecedents of product innovation, they do explain a significant proportion of the variation in organizational and process innovation. Family CEOs negatively influence organizational innovation, while firm size, TMT heterogeneity and a CEOs internal locus of control positively influence changes in organizational practices. Process innovation is more important once the firm is a high-tech one or its CEO has a high internal locus of control. Furthermore, CEO-tenure seems to have a moderate positive impact on process innovation until a certain threshold level of innovation is reached. The results clearly illustrate that product, process and organizational innovation have different antecedents.