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Family ownership: does it matter for funding and success of corporate innovations?

Author

Listed:
  • Dorothea Schäfer

    (German Institute for Economic Research DIW
    Jönköping International Business School
    CERBE Center for Relationship Banking and Economics)

  • Andreas Stephan

    () (German Institute for Economic Research DIW
    Jönköping International Business School
    Ratio Institute)

  • Jenniffer Solórzano Mosquera

    (Jönköping International Business School)

Abstract

Using the Mannheim innovation panel, we investigate whether family firms have higher financial need and how this affects both innovation input and innovation outcomes such as firm or market novelties, or process innovation. Applying the CDM framework, we find that family firms are more likely to have a latent financial need for innovation, which means that they have innovation ideas which they have not implemented yet. We find that family firms have a significantly lower marginal innovation productivity in particular for innovations with radical character, i.e., market novelties. We conclude from this evidence that family firms have a comparative disadvantage in innovation projects that imply high risk and require high innovation capability.

Suggested Citation

  • 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.
  • Handle: RePEc:kap:sbusec:v:48:y:2017:i:4:d:10.1007_s11187-016-9813-y
    DOI: 10.1007/s11187-016-9813-y
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    Cited by:

    1. Febi Jensen & Dorothea Schäfer & Andreas Stephan, 2019. "Financial Constraints of Firms with Environmental Innovation," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 88(3), pages 43-65.
    2. Marco Cucculelli & Valentina Peruzzi & Alberto Zazzaro, 2019. "Relational capital in lending relationships: evidence from European family firms," Small Business Economics, Springer, vol. 52(1), pages 277-301, January.

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    More about this item

    Keywords

    Innovation capability; Funding gaps; Financing restrictions; Family firms; CDM;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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