Performance Determinants in Family Business: Linking Innovation and Internationalisation

Performance Determinants in Family Business: Linking Innovation and Internationalisation

Joana Costa (Universidade de Aveiro, Portugal)
DOI: 10.4018/978-1-7998-3648-3.ch012

Abstract

Family businesses (FBs) are central to economies: in Portugal the impact of these structures reaches 2/3 of the GDP, 1/2 of the labour force, and 4/5 of the firms in operation, most of them being SMEs. These organisations play a central role in terms of job creation, local development, knowledge transfer, and territorial cohesion. Innovative activities are key factors for competitive economies; yet innovation increases risk exposure and FBs are conservative and risk adverse, resisting change, relying on internal factors rather than opening to the external environment, consequently postponing innovation and thus pledging their future. Their embedded culture reduces innovative propensity; still, the existence loyalty trust and informal networks enhance individual or collective innovation processes. Using a dataset of 110 FBs innovation and internationalization along with other structural characteristics are connected to their economic performance, shedding light on the determinants FB economic efficiency. Given their importance, made-to-measure policy schemes should be designed.
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Background

In most countries FBs are the foundations of economic activity at the regional, sectoral and national level. In Portugal FBs are responsible for the generation of almost 2/3 of the Gross Domestic Product; generate half of the job opportunities, and, are 4/5 of the total numbers in terms of firms in operation (PWC, 2016). Despite most of them being small, there are also FBs quoted on the stock market (e.g. Sonae, Amorim, Jerónimo Martins). Due to their singularities, these forms promote local development, knowledge transfer and promote local cohesion.

The fact that the country is a Moderate Innovator (European Innovation Scoreboard, 2019), generates increased interest on its analysis as it needs a deeper effort for innovation practices to be disseminated among companies in operation being a generalised practise to leverage the overall performance of firms.

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