Innovation and Inclusion: The Role of Shared Stories in Family Firms

A ManagementInk reflection on my article on storytelling and innovation in family firms.

Business and Management INK


[We’re pleased to welcome Nadine Kammerlander of University of St. Gallen. Dr. Kammerlander recently published an article in the December 2015 issue of Family Business Reviewwith co-authors Cinzi Dessi, Miriam Bird, Michela Floris, and Alessandra Murru, entitled “The Impact of Shared Stories on Family Firm Innovation: A Multicase Study.”]

  • What inspired you to be interested in this topic?

Over the last years, researchers have dedicated a lot of effort to understand how organizations should be set up and managed to foster innovation – also in the family business context. But hardly anyone has taken a closer look at the family side. This is a pity, because there is so much anecdotal evidence that, especially in small family firms, a lot of informal stuff is going on. Spouses, kids, and other family members are, for instance, asked before important strategic decisions are taken – but this never gets recorded…

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Family Ownership Stake: Does the Amount Matter?

Often we treat family firms as a monolithic group. In particular, we do not make any differences between firms in which a family holds the majority of shares versus a firm in which the family is a blockholder with as few as 5 or 10% ownership shares. But is this simplification correct?

To answer those questions my former student Nemo Rime, who now works as an investment banking analyst in London, and I sat together in 2013 to design a study that answers how pure family firms (ownership >25%; FF), family-influenced firms (ownership between 5 and 25%; FIF), and non-family firms (NFF) differ in terms of various performance measures and investment behavior.

That‘s the outcome, as summarized in Nemo‘s excellent thesis:

  • In Germany, the pure family firms clearly outperformed the other types of organizations with respect to profit margins. In Switzerland, however, the non-family firms outperformed. Overall, we observed an outperformance of family firms with respect to several performance indicators.
  • Family-influenced firms, however, play a more volatile role, sometimes being top performers and sometimes underperformers
  • The outperformance of family-firms was observed in most years between 2000 and 2014 but seems to be stronger in times of economic crises as compared to boosting economies.
  • Pure family firms spend most money on CAPEX investments and family-influenced firms spend least money on CAPEX.
  • Family-influenced companies had the highest R&D investment, whereas pure family firms had the lowest R&D investments.

More analyses are now required. For instance, some of the findigs above might be due to industry or size differences. But what do we learn so far? Clearly, it is not a good idea to treat all family firms the same, but our anaylses need to become much more advanced!

Rime (2016): EBITDA margin of pure family firms (FF), family-influenced firms (FIF), and non-family firms (NFF)

The findings of this study are based on 365 publically listed German and Swiss firms that were observed from 2000 to 2014.

Recension of our family dynasty study by EQUA foundation

The EQUA foundation has published a recension on our study on value creation by family dynasties. In this recension, Dr. Rena Haftlmeier-Seiffert writes:

Thomas Zellweger und Nadine Kammerlander beleuchten mit vorliegender Publikation nun einen völlig neuen Aspekt in der Familienunternehmensforschung. Sie untersuchen die Veränderungen von Unternehmerfamilien im Laufe ihrer Geschichte aus finanztechnischer Perspektive und entwickeln ein 3-Phasenmodell […] Diese kleine Publikation […] sei jeder Unternehmerfamilie empfohlen, die vorhat, die Phase der Gründung und Etablierung eines Unternehmens zu überleben.

You can find the link to the full review (German only) following this link.