What is R&D Investments

This chapter illustrates the main issues with respect to innovation process within family firms. In the first part, it describes the main theories underlying the innovation process of family firms (agency theory, altruism, portfolio theory, stewardship theory, socioemotional wealth perspective). In the second part, it exposes the R&D underinvestment problem in large companies with a focus on the effect of the family ownership on the R&D investments. In the third part, it describes the effect of family ownership on the innovation output with a focus on the kind of innovation (radical vs. incremental). In the fourth section, studies exploring the innovation strategies of family firms (prospectors, analysers, defenders, reactors) are examined. In the fifth section, it sheds light on the innovation management process of family firms. In this part, it explores the issues of internal innovation process (functional vs. cross-functional structure) and of the partnerships with external actors aimed to generate innovation.