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Innovation in family and non-family SMEs: an exploratory analysis

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  • Nicolas Classen

    ()

  • Martin Carree
  • Anita Gils
  • Bettina Peters

Abstract

This study provides an exploratory analysis of differences between family and non-family firms in innovation investment, product and process innovation outcomes, and labor productivity. Using data from the Community Innovation Survey on 2,087 German small- and medium-sized enterprises (SMEs), we observe significant disparities at each stage of the innovation process. Whereas family SMEs have a higher propensity to invest in innovation at all, conditional on investing in innovation, these companies do so less intensively than their non-family counterparts. Family SMEs further tend to outperform non-family SMEs in terms of process innovation outcomes when controlling for innovation investment. Given the level of product and process innovation, however, family SMEs underperform regarding labor productivity in comparison to non-family SMEs. These findings complement previous empirical research by illustrating how the presence of a dominant family relates to innovation inputs and outputs of SMEs in Europe’s largest economy and its innovative SME sector. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Nicolas Classen & Martin Carree & Anita Gils & Bettina Peters, 2014. "Innovation in family and non-family SMEs: an exploratory analysis," Small Business Economics, Springer, vol. 42(3), pages 595-609, March.
  • Handle: RePEc:kap:sbusec:v:42:y:2014:i:3:p:595-609
    DOI: 10.1007/s11187-013-9490-z
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    References listed on IDEAS

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    Cited by:

    1. Dorothea Schäfer & Andreas Stephan & Jenniffer Solórzano Mosquera, 2017. "Family ownership: does it matter for funding and success of corporate innovations?," Small Business Economics, Springer, vol. 48(4), pages 931-951, April.
    2. repec:eee:respol:v:48:y:2019:i:9:6 is not listed on IDEAS
    3. Rammer, Christian & Schubert, Torben & Hünermund, Paul & Köhler, Mila & Iferd, Younes & Peters, Bettina, 2016. "Dokumentation zur Innovationserhebung 2015," ZEW Dokumentationen 16-01, ZEW - Leibniz Centre for European Economic Research.
    4. repec:gam:jsusta:v:11:y:2019:i:7:p:2017-:d:220093 is not listed on IDEAS
    5. repec:gam:jsusta:v:11:y:2019:i:7:p:2162-:d:221811 is not listed on IDEAS
    6. repec:spr:rvmgts:v:13:y:2019:i:1:d:10.1007_s11846-017-0239-y is not listed on IDEAS
    7. Francesco Aiello & Lidia Mannarino & Valeria Pupo, 2017. "Innovation And Productivity In Family Firms: Evidence From A Sample Of European Firms," Working Papers 201706, Università della Calabria, Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF.
    8. Dan-Ching Huang & Tzong-Ru Lee & Per Hilletofth & Ching-Kuei Kao, 2016. "Creation of a step-by-step process in the pre-startup of a micro business," International Journal of Management and Enterprise Development, Inderscience Enterprises Ltd, vol. 15(1), pages 43-60.
    9. D’Angelo, Alfredo & Majocchi, Antonio & Buck, Trevor, 2016. "External managers, family ownership and the scope of SME internationalization," Journal of World Business, Elsevier, vol. 51(4), pages 534-547.
    10. Berlemann, Michael & Jahn, Vera, 2014. "Governance, Firm Size and Innovative Capacity: Regional Empirical Evidence for Germany," Working Paper 150/2014, Helmut Schmidt University, Hamburg.
    11. repec:kap:sbusec:v:50:y:2018:i:1:d:10.1007_s11187-017-9884-4 is not listed on IDEAS
    12. Stough, Roger & Welter, Friederike & Block, Joern & Wennberg, Karl & Basco, Rodrigo, 2015. "Family business and regional science: “Bridging the gap”," Journal of Family Business Strategy, Elsevier, vol. 6(4), pages 208-218.
    13. Röd, Irina, 2016. "Disentangling the family firm’s innovation process: A systematic review," Journal of Family Business Strategy, Elsevier, vol. 7(3), pages 185-201.
    14. repec:ssi:jouesi:v:2:y:2014:i:1:p:1-11 is not listed on IDEAS
    15. Carolin Decker & Christina Günther, 2017. "The impact of family ownership on innovation: evidence from the German machine tool industry," Small Business Economics, Springer, vol. 48(1), pages 199-212, January.
    16. repec:eee:fambus:v:9:y:2018:i:2:p:114-127 is not listed on IDEAS
    17. López-Delgado, P. & Diéguez-Soto, J., 2015. "Lone founders, types of private family businesses and firm performance," Journal of Family Business Strategy, Elsevier, vol. 6(2), pages 73-85.
    18. Werner, Arndt & Schröder, Christian & Mohr, Benjamin, 2013. "Innovationstätigkeit von Familienunternehmen," IfM-Materialien 225, Institut für Mittelstandsforschung (IfM) Bonn.
    19. Andersson, Fredrik W. & Johansson, Dan & Karlsson, Johan & Lodefalk, Magnus & Poldahl, Andreas, 2017. "The Characteristics and Performance of Family Firms: Exploiting information on ownership, governance and kinship using total population data," Working Papers 2017:1, Örebro University, School of Business.
    20. Nuno Campos Pereira & Nuno Araújo & Leonardo Costa, 2016. "A counting multidimensional innovation index for SMEs," Working Papers de Economia (Economics Working Papers) 01, Católica Porto Business School, Universidade Católica Portuguesa.
    21. Avenyo, Elvis Korku & Konte, Maty & Mohnen, Pierre, 2019. "The employment impact of product innovations in sub-Saharan Africa: Firm-level evidence," Research Policy, Elsevier, vol. 48(9), pages 1-1.
    22. Schlömer-Laufen, Nadine & Kay, Rosemarie & Holz, Michael, 2014. "Works councils in family businesses in Germany: Why are there so few?," Working Papers 03/14, Institut für Mittelstandsforschung (IfM) Bonn.
    23. Wouter Broekaert & Petra Andries & Koenraad Debackere, 2016. "Innovation processes in family firms: the relevance of organizational flexibility," Small Business Economics, Springer, vol. 47(3), pages 771-785, October.
    24. repec:spr:rvmgts:v:12:y:2018:i:3:d:10.1007_s11846-017-0230-7 is not listed on IDEAS
    25. repec:gam:jsusta:v:11:y:2019:i:14:p:3805-:d:247483 is not listed on IDEAS

    More about this item

    Keywords

    Family firms; Innovation investment; Product innovation; Process innovation; Productivity; O32; L26; C31;

    JEL classification:

    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models

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