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Firm-level innovation by Japanese family firms: Empirical analysis using multidimensional innovation measures

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  • Kubota, Keiichi
  • Takehara, Hitoshi

Abstract

This study investigates whether innovation activities conducted by family firms in Japan can be distinguished from those carried out by non-family firms. For this purpose, we choose a sample of listed family firms and investigate four firm-level innovation measures, namely R&D intensity, the number of patents, the quality of patents, and innovation efficiency, over a sample period of 2003 to 2012. We find that innovation output by family firms in Japan is lower than that of non-family firms, although innovation input is higher in family firms. The innovation of Japanese family firms, overall, is inefficient compared with non-family firms. Our cross-sectional regression analysis shows that family shareholding is positively associated with the innovation measures after controlling for several of the characteristics of firms. On the contrary, founder CEOs enhance R&D investment, although their presence is detrimental to both the number of patents and their quality. Descendant CEOs tend to adopt low-input/low-output innovation strategies. In sum, the innovative activities of Japanese family firms continually change to accomplish their sustainable growth.

Suggested Citation

  • Kubota, Keiichi & Takehara, Hitoshi, 2019. "Firm-level innovation by Japanese family firms: Empirical analysis using multidimensional innovation measures," Pacific-Basin Finance Journal, Elsevier, vol. 57(C).
    • Handle: RePEc:eee:pacfin:v:57:y:2019:i:c:s0927538x16303146
    DOI: 10.1016/j.pacfin.2018.05.012
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    Cited by:

    1. Qian Wang & Xiaojie Pei & Huigang Liang, 2022. "Founder CEO, CEO Characteristics, and Firm Innovation Efficiency: An Empirical Study of China’s GEM-Listed Companies," Sustainability, MDPI, vol. 14(14), pages 1-22, July.
    2. Joern Block & Christopher Hansen & Holger Steinmetz, 2023. "Are Family Firms Doing More Innovation Output With Less Innovation Input? A Replication and Extension," Entrepreneurship Theory and Practice, , vol. 47(4), pages 1496-1520, July.
    3. Hedy Jiaying Huang & Ahsan Habib & Sophia Li Sun & Ying Liu & Huiting Guo, 2021. "Financial reporting and corporate innovation: a review of the international literature," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(4), pages 5439-5499, December.

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