Family vs. non-family firms: a comparison of innovation, internationalization, and resilience
Long-term survival is the most basic goal of an enterprise. Among the key factors affecting the survival of businesses, firstly, innovation, through investment in research and development to improve or refine products or processes, helps businesses to develop unique core competencies, and becomes a key driver of sustainable development in a competitive market. Secondly, internationalization has become a key strategy for firms to gain sustainable competitive advantage by improving existing resources, expanding into new markets and enhancing knowledge. Finally, proper crisis management also plays an essential role in determining the future success of an organization and its survival in times of crisis by increasing its level of resilience. For family firms that carry generations of people, they possess a stronger willingness to survive than non-family firms. This is due to the fact that family members are deeply attached to the mission and values of the business making them more focused on the long-term development of the business. In the field of family business research, as family firms are a heterogeneous group, the interactions between family members, the family and the firm, and the impact of these interactions on organizational outcomes have become an important topic in distinguishing between family and non-family firms in terms of the development of innovative activities. At the same time, the unique governance characteristics exhibited by family firms, such as the family ownership structure, and the impact of family members' involvement in management on the family's important strategic decisions, such as internationalization, also deserve further research. Finally, the role of family ownership, family governance in the crisis management of family firms and the resilience of family firms in the backdrop of the COVID-19 pandemic deserve further reflection. This study investigates family business performance in innovation, internationalization and resilience by applying a series of Probit, Tobit models. With data from the World Bank Enterprise Survey dataset (2019-2020) and Follow-up on COVID-19 (rounds 1, 2 and 3), this study contributes to the research in the field of family firms by conducting three empirical studies. These studies focused on several research questions, namely（1) Are the factors driving innovation and the innovation behavior of family-owned firms different to non-family-owned firms？(2)What is the role of internal family governance and the influence of external stimuli (competition) on innovation？(3) Do family businesses and non-family businesses differ in their levels of internationalization? (4) Can innovation mediate the internationalization outcomes of family-owned vs non-family-owned businesses? (5) How well did family firms adapt to the COVID-19 pandemic compared to non-family firms? (6) Do innovation activities, management practices and family governance moderate the adaptability of family firms in response to shocks? In terms of innovation in family firms, my findings confirm that family firms have the ability to innovate, especially in terms of product innovation, process innovation, external knowledge acquisition and R&D investment. Therefore, managers and owners of family firms should strongly support family firms in implementing these innovative activities, which can be a unique characteristic of family firms over non-family firms, thus helping family firms to become more competitive. Many of the innovation metrics are negatively impacted when family members comprise more than 50% of the management team. Therefore, appointing non-family CEOs or hiring a certain percentage of non-family managers is an important governance measure to overcome possible nepotism and thus increase the innovation potential of family firms. From an internationalization perspective, my study demonstrates that family ownership serves as an advantage that makes family firms more likely to internationalize than non-family firms. Therefore, family managers or owners need to understand that family influence can be positive in terms of internationalization. In the light of the crisis, my research argues for the positive role of family ownership and resilience in the face of external shocks. This study emphasizes the positive correlation between innovation (product innovation, process innovation, internal R&D investment) and family governance in moderating family resilience, respectively. Thus, this study provides family firm owners and managers with priorities on how to prepare for unexpected crises in order to better protect the continuity of family firms. Specifically, on the one hand, family firms increase their internal R&D investment and accumulate internal resources, which can serve as an insurance policy against future exogenous shocks. On the other hand, maintaining continuous innovation creates a supportive environment for the firm to better cope with exogenous shocks, and it is therefore also crucial for managers to encourage their employees to think outside the box and thus contribute to the introduction of new products and services. I conclude by highlighting the limitations of this research work as well as pointing the way for future research.
Family firms, Innovation, Internationalization, Resilience
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