To read this content please select one of the options below:

Family firms propensity to lean innovation in the emerging economy: a moderating role of executive's compensation

Muhammad Zulfiqar (School of Accounting, Dongbei University of Finance and Economics, Dalian, China)
Muhammad Usman Yousaf (Department of Business Administration, Government College University, Faisalabad, Pakistan)
Md Rashidul Islam (School of Accounting, Dongbei University of Finance and Economics, Dalian, China) ( Department of Business Administration, East West University, Dhaka, Bangladesh)
Sadeen Ghafoor (School of Accounting, Dongbei University of Finance and Economics, Dalian, China)

Journal of Family Business Management

ISSN: 2043-6238

Article publication date: 8 April 2020

Issue publication date: 2 February 2021

296

Abstract

Purpose

The purpose of this study is to investigate the empirical relationship between family firms and lean innovation (i.e. generating more output with less input) as well as the moderating role of the executive's compensation.

Design/methodology/approach

Panel data for ten years (2007–2016) have been collected from the CSMAR database. This study concludes the findings using descriptive statistics, correlation and panel data analysis techniques applying statistical software STATA.

Findings

Results show that family firms are not motivated to follow lean innovation strategies until unless the executives are compensated well. We further find that family firms are more likely to pursue a lean innovation strategy, and they demonstrate a superior record of converting R&D inputs as granted patents, and; both input and output innovation are significantly affected by executive compensations. However, this study shows an insignificant negative relationship of propensity to patents with the moderating effects of executive compensation.

Research limitations/implications

This research has been conducted on the emerging Chinese market. The study is useful for policymakers and managers to devise such strategies which can make the role of executive's more effective to reduce the agency cost and reap the benefits of innovation input more effectively (Petersen, 2009). Also, family firms are heterogeneous, and the research outcome may be applicable for both advanced and emerging economies.

Originality/value

The previous family firm's research paid less attention to the role of the executive's compensation on the relationship of family firms and lean innovation. Moreover, they prioritize insight into how executive's compensation affects different proxies of innovation. This study sheds new light on the paradoxical findings of family firms and lean innovation by analyzing the significant role of executive compensation.

Keywords

Citation

Zulfiqar, M., Yousaf, M.U., Islam, M.R. and Ghafoor, S. (2021), "Family firms propensity to lean innovation in the emerging economy: a moderating role of executive's compensation", Journal of Family Business Management, Vol. 11 No. 1, pp. 32-50. https://doi.org/10.1108/JFBM-11-2018-0057

Publisher

:

Emerald Publishing Limited

Copyright © 2020, Emerald Publishing Limited

Related articles