How actors and groups in the family business system influence innovation in the family business: an analytical framework

Abstract

Innovation is understood to be vital to the prosperity and survival of family businesses and there is great value for practitioners, advisors, researchers, and academics in understanding how innovation occurs in family businesses—in a clear and practical way. I provide a framework that aides in shedding light on how and by whom innovation may be enacted, promoted, and supported in the family business system.

The family business literature offers clear and practical models explaining that the family business must be understood in the context of the family business system, which includes the business organization, the owners of the business, and the family that has ownership control of the business. Frameworks also explain how this system may be affected by how a family in business changes over time. These are demonstrated by the “Three-Circle Model” and the “Three-Dimension Developmental Model” of the family business respectively. The literature on innovation is extensive, albeit, as a body, much of it is confusing and unfortunately impractical for consistent application across the family business system. Recognising this, we focus our discussion and draw out two taxonomies from the literature, chosen for their accessibility and applicability and the crispness with which they allow us to talk about innovation. I then focus on one taxonomy and connect it back to the actors and groups in the family business system to establish our analytical framework. I believe the latter and its practical, actionable orientation to be a valuable addition to the literature.