What Makes a Family Firm Innovative? CEO Risk-Taking Propensity and the Organizational Context of Family Firms

Investigating the new product portfolio innovativeness of family firms connects two important topics that have recently received considerable attention in innovation and family firm research. First, new product portfolio innovativeness has been identified as a critical determinant of firm performance. Second, research on family firms has focused on the questions of if and why family firms are more or less innovative than other organizational forms. Research investigating the innovativeness of family firms has often applied a risk-oriented perspective by identifying socioemotional wealth (SEW) as the main reference that determines firm behavior. Thus, prior research has mainly focused on the organizational context to predict innovation-related family firm behavior and neglected the impact of preferences and the behavior of the chief executive officer (CEO), which have both been shown to affect firm outcomes. Hence, this study aims to extend the previous research by introducing the CEO's disposition to organizational context variables to explain the new product portfolio innovativeness of small and medium-sized family firms. Specifically, this study explores how the organizational context (i.e., ownership by top management team [TMT] family members and generation in charge of the family firm) of family firms interacts with CEO risk-taking propensity to affect new product portfolio innovativeness. Using a sample of 114 German CEOs of small and medium-sized family firms operating in manufacturing industries, the results show that CEO risk-taking propensity has a positive effect on new product portfolio innovativeness. Moreover, the analyses show that the organizational context of family firms impacts the relationship between CEO risk-taking propensity and new product portfolio innovativeness. Specifically, the relationship between CEO risk-taking propensity and new product portfolio innovativeness is weaker if levels of ownership by TMT family members are high (high SEW). Additionally, the effect of CEO risk-taking propensity on new product portfolio innovativeness is stronger in family firms at earlier generational stages (high SEW). This result suggests that if SEW is a strong reference, family firm-specific characteristics can affect individual dispositions and, in turn, the behaviors of executives. Therefore, this study helps extend the knowledge on the determinants of new product portfolio innovativeness of family firms by considering an individual CEO preference and the organizational context variables of family firms simultaneously.

Innovations in Small and Medium-Sized Family Firms

Small and medium-sized firms are a prevalent organizational form in Germany. Their importance for the German economy is indisputable. Most of them are global market leaders in their niches and are considered to be a force for innovation in the German economy. The ability to be innovative in niche markets has been identified as the antecedent of their strong, or even dominant, competitive positions in their industries. The driver of this innovation success may well be the family, which distinguishes family firms from non-family firms. Nils Kraiczy analyzes if a family influences innovation in a family firm and if this influence has only positive effects. The dissertation focuses on the impact of top management teams on innovations interacting with family firm-specific characteristics. The author shows the complexity of family influence by presenting different effects of each investigated family firm-specific characteristic on the relationship between top management team behavior and innovation.

Ethnic Diversity, Social Trust and the Moderating Role of Integration Policy

Increasing ethnic diversity and whether or not it impacts on trust are highly debated topics. Numerous studies report a negative relationship between diversity and trust, particularly in the US. A growing body of follow-up studies examined the extent to which these findings can be transferred to Europe, but the results remain inconclusive. Moving beyond the discussion of the mere existence or absence of diversity effects on trust, this study is concerned with the moderation of this relationship: It addresses the neglected role of subnational integration policies influencing diversity’s impact on trust. Empirical tests not only indicate that integration policies moderate the relationship, but also suggest that the influence of policies varies substantively according to the specific policy aspect under consideration.

Early-onset Crohn's disease is a risk factor for smaller final height.

OBJECTIVES Growth retardation is a frequent complication of paediatric inflammatory bowel disease (IBD). Only a few studies report the final height of these patients, with controversial results. We compared adult height of patients with paediatric IBD with that of patients with adult-onset disease. METHODS Height data of 675 women 19-44 years of age and 454 men 23-44 years of age obtained at inclusion in the Swiss IBD cohort study registry were grouped according to the age at diagnosis: (a) prepubertal (men≤13, women≤11 years), (b) pubertal (men 13-22, women 11-18 years) and (c) adult (men>22, women>18 years of age), and compared with each other and with healthy controls. RESULTS Male patients with prepubertal onset of Crohn's disease (CD) had significantly lower final height (mean 172±6 cm, range 161-182) compared with men with pubertal (179±6 cm, 161-192) or adult (178±7 cm, 162-200) age at onset and the general population (178±7 cm, 142-204). Height z-scores standardized against heights of the normal population were significantly lower in all patients with a prepubertal diagnosis of CD (-0.8±0.9) compared with the other patient groups (-0.1±0.8, P<0.001). Prepubertal onset of CD emerged as a risk factor for reduced final height in patients with prepubertal CD. No difference for final height was found between patients with ulcerative or unclassified IBD diagnosed at prepubertal, pubertal or adult age. CONCLUSION Prepubertal onset of CD is a risk for lower final height, independent of the initial disease location and the necessity for surgical interventions.

Pralines from a smaller gift box taste better

This study shows that taste ratings of repeatedly chosen pralines decrease more when the gift box is large compared to small. Within their first choices consumers select the most preferred praline less often from the large assortment. These results are discussed in the light of variety seeking and dysfunctional choice.

Ready for a crisis? How supervisory boards affect the formalized crisis procedures of small and medium-sized family firms in Germany

Overcoming a crisis situation in which the socioemotional wealth (SEW) of a family is at risk can be threatened by a lack of formal crisis procedures, which can increase the probability of organizational decline. Thus, not being prepared for a crisis situation may be a critical factor in the long-term survival of family firms. From a corporate governance perspective, supervisory boards may achieve higher levels of crisis readiness. Applying the resourced-based view and SEW theory, we analyze the relationship between family ownership and formalized crisis procedures in 150 small and medium-sized German firms. Our results show that formalized crisis procedures decrease as family ownership increases. Including supervisory boards in our analysis, we find a significant moderating effect of supervisory boards on the relationship between family ownership and formalized crisis procedures. Specifically, our results suggest that family firms with supervisory boards show similar levels of formalized crisis procedures as non-family firms with supervisory boards. In contrast, family firms without supervisory boards exhibit lower levels of formalized crisis procedures compared with non-family firms without supervisory boards. We also discuss managerial implications, limitations, and future research.

Taking Root in the Silicon Forest: High-technology Firms as Surrogate Universities in Portland, Oregon

Most case studies of successful high-technology industry regions highlight the role of research universities in fostering regional economic development. The Portland, Oregon, region managed to root a thriving high-tech industry in the absence of this critical factor. In this article, I present a case study of the evolution of Portland's high-tech industry and propose that high-tech firms can act as surrogate universities that attract and develop labor, create knowledge, and function as incubators for startups. I conclude that planners working to develop high-tech industries in regions without major research universities should attract R&D-intensive firms, maintain information on key busineses and entrepreneurial ventures, support an innovation milieu, and set realistic goals.