New publication on family firm dynasties

How can family businesses remain successful not only over years but over decades? What needs to change from a small, founder-run business to a large and old portfolio of family-influenced firms? And are there any common characteristics of families that managed to build up a dynasty?

Some answers to those questions are included in a new publication of Thomas Zellweger (University of St. Gallen) and myself. In the new – German – booklet, published by the Kirsten Baus Institut, we use a sample of the 100 largest family firms in order to build up a model of long-term value creation in family dynasties.

Link to publication.

Reference: Zellweger, Thomas; Kammerlander, Nadine: Generationenübergreifende Wertgenerierung in Familienunternehmen: Langfriststrategien für Unternehmerfamilien. Schriftenreihe Kirsten Baus Institut, Stuttgart. Heft 25, 2015.

Patenting behavior of family firms

In his thesis, Dario Flückiger examined the patenting behavior of 69 automotive companies with European headquarters over the course of 3 years. Here is what he found:

  • There is no significant difference in the number of patents between family and non-family firms
  • However, patents of family firms are significantly less cited than that of non-family firms. This could be a sign of family firms innovating less radically with their innovations having less impact for the entire industry development
  • In terms of sales growth and profitability, family firms were outperforming non-family firms
  • Number of patents and patent citations both had a positive and significant effect on sales growth (measured with a 3-year time lag).
  • However, interestingly, number of patents and patent citations had a negative and significant effect on profitability (measured with a 3-year time lag)

If you are interested in the full results, please send an email to nadine.kammerlander [at] whu.edu

Appointment as Associate Editor of Family Business Review

I feel very happy and honored for my recent appointment as Associate Editor of Family Business Review. Family Business Review (FBR) is the leading journal in the field studying family business. With a current impact factor of more than 5.5, FBR is a perfect evidence for the importance of family firm studies, not only for practice but also in the academic world.

Together with my fellow Associate Editors and Editor Pramodita Sharma, I will handle manuscripts that fall into the scope of FBR, which is (according to its website) the

exploration of the dynamics of family-controlled enterprise, including firms ranging in size from the very large to the relatively small. FBR is focused not only the entrepreneurial founding generation, but also on family enterprises in the 2nd and 3rd generation and beyond, including some of the oldest companies in the world. In addition, the journal publishes interdisciplinary research on families of wealth, family foundations and offices.

I am very much looking forward to this job and hope to receive many high quality submissions from scholars of various disciplines and from around the world!

How can family firms motivate their employees to be innovative?

Employees are a key success factor for innovation – but how to motivate them?

Recent research showed that family firms are, on average, very innovative. But why is that? One reason provided by scholars is that employees in family firms feel especially encouraged to share their innovative ideas and implement them because of the particular “family firm culture.” So far, so good. But some of the readers might  wonder how exactly family firm owner-managers can motivate their employees to contribute to innovation. HSG-student, Johannes Netzhammer aimed to answer this question by integrating literature on family firms, innovation, and motivation. Here comes the summary of his excellent conceptual bachelor thesis (for references to original literature, please request the full text of the thesis):

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New article on Value Creation in Family Firms

Why are family firms more (or less) able to be successful over the long term as compared to other types of businesses? This is clearly one of the core questions of research on family firm research. While much research has been devoted to answering this question, our knowledge is still much fragmented. Thus, in this conceptual article, my co-authors and I call for more integrated research on family firms and their (dis-)advantages. We conclude that much research on, for instance, resources of family firms as well as governance structures of family firms has been conducted, but far too few effort has been dedicated to exploring the nexuses of those aspects.

Model of Value Creation
Model of Value Creation

 

Besides calling for more multi-theoretical theory building, the paper discusses, amongst others, the following topics.

  • “Goal ambidexterity”: We discuss three different types of family firms that are different in terms of their goals: Dreamers that focus on non-financial goals, traders that focus on financial-goals, and professional owners that manage both, financial and non-financial goals. We argue that professional owners (who possess “goal ambidexterity”) will benefit most in the long term.
  • We further discuss strategy formulation in family firms and note how an effectuation approach can be helpful not only for startups as discussed in prior literature, but also for family firms.
  • Moreover, we also discuss the different layers of governance that family firms need to be aware of: firm governance, owner governance, family governance, wealth governance. We highlight existing literature and discuss the interwoven nature of those aspects.
Goal diversity in family firms
Goal diversity in family firms

Link to article: here

Citation of the paper:

N. Kammerlander, P. Sieger, W. Voordeckers, T. Zellweger. 2015. Value Creation in Family Firms: A Model of Fit. Journal of Family Business Strategy 6(2): 63-72. doi:10.1016/j.jfbs.2015.04.001

Doing more with less: Innovation input and output of family firms ( Summary of our AMJ in press article)

Here’s what our meta-analysis* shows:

You ever wondered whether family firms are more or less innovative?

Well, both views hold some merit. First, yes, family firms invest indeed less into innovation. But why are they so stingy? Agreeing with some other researchers, we claim this has several reasons: First, family firms prefer less uncertain or “risky” investments such as increasing production capacity. Just imagine, all your wealth is concentrated into one asset (this is what many family owners’ portfolio actually looks like): Would you like the idea of investing in risky projects? Probably not. Second, innovation is really expensive. Often, industry average is that firms invest more than 10% of revenues into R&D. That’s a lot. And the money needs to come from somewhere, for instance, from banks or the stock market. But both options, bank loans and equity shares, would reduce the family’s control over the firm – something that family owners dislike a lot.

The story could end here… And too often, researchers and practitioners alike have stopped with the claim that family firms are less innovative. But wait: What about the innovation process? Isn’t it the outcome of the innovation process that actually counts? Indeed, we argue and show that family firms have a greater conversion rate than non-family firms. As a consequence, they even have greater innovation output – despite lower input.

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