The innovativeness of family firms through the economic cycle

Abstract

Purpose

The purpose of this paper is to understand whether the innovative effort of organizations increases or decreases over time, especially when the competitive environment is changing, as has been the case in the current economic downturn. For this reason, the objective of this article is to gauge the possible differences in innovative behaviour between family firms (FFs) and non‐family firms (NFFs) when the business environment becomes increasingly hostile.

Design/methodology/approach

The approach is a natural experiment study, which the authors use to analyse the possible differential behaviour of FFs in the recession context in contrast to the previous growth context. The empirical data for the present study were compiled through the Spanish sub‐sample of the European Manufacturing Survey's (EMS) 2006 and 2009 editions. To test the hypothesis the paper uses a matched‐pairs method that increases the comparability of the available data.

Findings

Family firms have a significant higher reduction of R&D in comparison to nonfamily firms. But contrary to some of the hypotheses, the other innovation dimensions have no significant differences, although most results indicate that family firms systematically and generally reduce their innovation more than NFFs.

Originality/value

This research contains two original features. First, the authors have been able to analyse the change in innovation behaviour of a comparable set of FFs and NFFs. The second relevant feature is the analysis of the specific interaction of FFs’ differential traits with the different types of innovation. The availability of detailed empirical data on innovation adoption enabled this study and is also one of its contributions. This research has also value since the results can be read as a challenge to existing approaches on the preferences and nature of FFs that have either a positive or negative effect on innovation.

Citation

Llach, J., Marquès, P., Bikfalvi, A., Simon, A. and Kraus, S. (2012), "The innovativeness of family firms through the economic cycle", Journal of Family Business Management, Vol. 2 No. 2, pp. 96-109. https://doi.org/10.1108/20436231211261853