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Small Business Economics

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09.12.2016

Family ownership: does it matter for funding and success of corporate innovations?

verfasst von: Dorothea Schäfer, Andreas Stephan, Jenniffer Solórzano Mosquera

Erschienen in: Small Business Economics | Ausgabe 4/2017

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Abstract

Using the Mannheim innovation panel, we investigate whether family firms have higher financial need and how this affects both innovation input and innovation outcomes such as firm or market novelties, or process innovation. Applying the CDM framework, we find that family firms are more likely to have a latent financial need for innovation, which means that they have innovation ideas which they have not implemented yet. We find that family firms have a significantly lower marginal innovation productivity in particular for innovations with radical character, i.e., market novelties. We conclude from this evidence that family firms have a comparative disadvantage in innovation projects that imply high risk and require high innovation capability.

Vorheriger Artikel Drivers of high-quality entrepreneurship: what changes did the crisis bring about?

Nächster Artikel Resource endowment and opportunity cost effects along the stages of entrepreneurship

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According to Gottschalk et al. (2014), over 99 % of FB have less than 250 employees.

See also the overview of Nanda and Kerr (2015).

For an overview of state-of-the-art dynamic approaches of R&D and innovation modeling, see Peters et al. (2016). As information on financial need and family ownership is only available for year 2006, we cannot apply a dynamic panel model in this context.

The variables InnoNovel and InnoFirm are fractions and thus censored with a lower-bound value of 0.

The disadvantage of value added is that this information is less frequently available for firms in comparison to sales.

We employ David Roodman’s CMP (conditional mixed processes) procedure implemented in STATA for the estimations (Roodman 2009; 2014). The method has the advantage of allowing for mixed processes; that is, it permits different types of dependent variables in the system (binary, censored, interval, and continuous variables). It also allows parameters to be fixed or random, and it does not exclude missing values listwise, but conditions on each available observation and estimates simultaneous equation systems using maximum likelihood (ML). For an alternative estimation approach, see Baum et al. (2015).

Again, as mentioned above, in a recursive system of equations, the estimations can be based on observed values of right-hand side endogenous variables, not on instrumented ones.

Note that the explanation for this change of significance is that predicted fn is more strongly correlated with the other explanatory variables and therefore becomes less significant when instrumented.

Again, the results are available from the authors upon request.

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Titel: Family ownership: does it matter for funding and success of corporate innovations?
verfasst von: Dorothea Schäfer
Andreas Stephan
Jenniffer Solórzano Mosquera
Publikationsdatum: 09.12.2016
Verlag: Springer US
Erschienen in: Small Business Economics / Ausgabe 4/2017
Print ISSN: 0921-898X
Elektronische ISSN: 1573-0913
DOI: https://doi.org/10.1007/s11187-016-9813-y

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