Innovation in the context of a family business means doing things better, faster, and cheaper in order to succeed with limited resources, and it’s a necessity to compete and grow against better resourced and often publicly-owned businesses. So are family businesses more entrepreneurial and innovative than their non-family counterparts? Or does typical family business conservatism actually deter risk taking?
Family business attitudes to innovation
The notion that innovation is a good thing received overwhelming support from the surveyed respondents, but, only a minority of had actually set aside funds for innovation:
20% of respondents felt it was ‘critical’ that their successors show entrepreneurial flair, and 55% claimed it was ‘very important’.
It’s clear that most family businesses value flexibility and adaptability, and think of these qualities as important aspects of entrepreneurship and innovation. What wasn’t clear is whether these qualities were translating into actual entrepreneurial behaviour and innovation?
Innovation and entrepreneurial successors
There could be a generational factor at work here. Founders will have likely possessed a degree of entrepreneurial flair in order to have created and grown a successful business. They took risks out of necessity. The next generation is more likely to revitalise the family business’ strategy and professionalise how the business is run, than pursue a risky or entrepreneurial agenda.
Entrepreneurship literature generally focuses on traditional firms – on the creation of new enterprises, especially through new ventures, innovation, and renewal within organisations. Family businesses however don’t face just one of these challenges – they need to find ways to create new streams of value within an existing long-term oriented family business setting by exploring new ways of doing things and at the same time exploiting existing products, services, or organisational processes.
It’s critical that entrepreneurship isn’t driven solely by the business owner – product or process innovation from generation to generation, and even taking some risks, is an important part of regenerating the business
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