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Family Ownership: Does it Matter for Funding and Success of Corporate Innovations?

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  • Dorothea Schäfer

    (German Institute for Economic Research DIW Berlin)

  • Andreas Stephan

    () (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, 2016. "Family Ownership: Does it Matter for Funding and Success of Corporate Innovations?," CERBE Working Papers wpC14, CERBE Center for Relationship Banking and Economics.
  • Handle: RePEc:lsa:wpaper:wpc14
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    References listed on IDEAS

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    1. repec:diw:diwvjh:88-3-3 is not listed on IDEAS
    2. repec:kap:sbusec:v:52:y:2019:i:1:d:10.1007_s11187-018-0019-3 is not listed on IDEAS
    3. 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.

    More about this item

    Keywords

    Innovation; Capability; Funding gaps; Financing Restrictions; Family Firms; CDM;

    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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