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Psychological ownership as a driving factor of innovation in older family firms

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  • Rau, Sabine B.
  • Werner, Arndt
  • Schell, Sabrina

Abstract

Innovation is often key to long-term success. While some family firms innovate less when growing older, others are very successful and innovative over multiple generations. We provide a new explanation for this phenomenon by showing that psychological ownership can influence the relationship between generation in ownership and innovation output. In line with the literature, we find that over the generations, innovation output decreases, being significantly lower in the third and later generation than in the founder generation. However, if the third and later generation owner-managers have high levels of psychological ownership, innovation output is as high as in the founder and second generation. Our hypotheses are supported by data obtained from 942 German firms. Innovation in the third generation and beyond seems more feasible when not only legal ownership, but also psychological ownership, is passed down to the succeeding generation.

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  • Rau, Sabine B. & Werner, Arndt & Schell, Sabrina, 2019. "Psychological ownership as a driving factor of innovation in older family firms," Journal of Family Business Strategy, Elsevier, vol. 10(4).
    • Handle: RePEc:eee:fambus:v:10:y:2019:i:4:s1877858517301031
    DOI: 10.1016/j.jfbs.2018.03.001
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    3. Dieudonnee Cobben & Petra C. M. Neessen & Diana Rus & Nadine Roijakkers, 2023. "How family firms use governance mechanisms to mitigate the risks of ecosystems: a case study from healthcare," Small Business Economics, Springer, vol. 60(4), pages 1369-1388, April.
    4. Marta Urbaníková & Michaela Štubňová & Viera Papcunová & Jarmila Hudáková, 2020. "Analysis of Innovation Activities of Slovak Small and Medium-Sized Family Businesses," Administrative Sciences, MDPI, vol. 10(4), pages 1-19, October.
    5. Ivan Miroshnychenko & Giorgio Vocalelli & Alfredo Massis & Stefano Grassi & Francesco Ravazzolo, 2024. "The COVID-19 pandemic and family business performance," Small Business Economics, Springer, vol. 62(1), pages 213-241, January.
    6. Baù, Massimo & Pittino, Daniel & Sieger, Philipp & Eddleston, Kimberly A., 2020. "Careers in family business: New avenues for careers and family business research in the 21st century," Journal of Family Business Strategy, Elsevier, vol. 11(3).

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