Disentangling antecedents and performance effects of family SME innovation: A knowledge-based perspective

Abstract

Understanding how family small and medium-sized enterprises (SMEs) seize opportunities for innovation and thus achieve superior performance is of substantial interest to family firm managers and academia. This paper develops a conceptual framework of antecedents that include resources internal and external to the firm in the two major dimensions of technological innovation (TI) and management innovation (MI) and their effects on financial performance. The framework is empirically tested with survey data from 152 manufacturing family SMEs in the D-A-CH countries, which comprise Germany (D), Austria (A) and Switzerland (CH). Drawing on the knowledge-based view, the results highlight the central role of firm-external knowledge for family firm innovation, which is inherent in an industry’s technological opportunities and interorganizational collaboration. Furthermore, results show that it is only through technological innovation that family firms can capitalize on innovation. Finally, management innovation is still observed to constitute a vital complement for technological innovation in that it is an enabler for innovation in products and processes. Recommendations for practice include the need for technological innovation, openness toward collaborations with external partners and receptiveness to knowledge from external sources.