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

Small Business Economics

Volumn 48, Issue 4, 2017, Pages 931-951

  Schäfer, Dorothea ^a,b,c   Stephan, Andreas ^a,b,d   Mosquera, Jenniffer Solórzano ^b  

^a DIW BERLIN   (Germany)

^b JÖNKÖPING INTERNATIONAL BUSINESS SCHOOL   (Sweden)

^c CERBE Center for Relationship Banking and Economics   (Italy)

^d Stockholm School of Economics   (Sweden)

Author keywords

CDM; Family firms; Financing restrictions; Funding gaps; Innovation capability

Indexed keywords

EID: 85003819812     PISSN: 0921898X     EISSN: 15730913     Source Type: Journal    
DOI: 10.1007/s11187-016-9813-y     Document Type: Article

References (56)

1. Ampenberger, M., Schmid, T., Achleitner, A.-K., & Kaserer, C. (2013). Capital structure decisions in family firms: empirical evidence from a bank-based economy. Review of Managerial Science, 7, 247–275. doi:10.1007/s11846-011-0077-2.
2. Anderson, R.C., Duru, A., & Reeb, D.M. (2012). Investment policy in family controlled firms. Journal of Banking & Finance, 36, 1744–1758.
3. Anderson, R.C., Mansi, S.A., & Reeb, D.M. (2003). Founding family ownership and the agency cost of debt. Journal of Financial Economics, 68, 263–285. doi:10.1016/S0304-405X(03)00067-9.
4. Andres, C. (2008). Large shareholders and firm performance—an empirical examination of founding-family ownership. Journal of Corporate Finance, 14, 431–445. doi:10.1016/j.jcorpfin.2008.05.003.
5. Andres, C. (2011). Family ownership, financing constraints and investment decisions. Applied Financial Economics, 21, 1641–1659. doi:10.1080/09603107.2011.589805.
6. Bandiera, O., Guiso, L., Prat, A., & Sadun, R. (2015). Matching firms, managers, and incentives. Journal of Labor Economics, 33, 623–681. doi:10.1086/679672.
7. Baum, C.F., Lööf, H., Nabavi, P., & Stephan, A. (2015). A New Approach to Estimation of the R&D-Innovation-Productivity Relationship. Boston College Working Papers in Economics 876, Boston College Department of Economics.
8. Coit, G. (1991). The modern corporation and private property: New Brunswick, N.J., U.S.A.: Transaction Publishers, Originally published in 1932 by Harcourt, Brace & World–T.p. verso, Revised edn, Berle, Adolf Augustus and 1896 Means.
9. Bester, H. (1985). Screening vs. rationing in credit markets with imperfect information. American Economic Review, 75, 850–55.
10. Block, J.H. (2012). R&D investments in family and founder firms: an agency perspective. Journal of Business Venturing, 27, 248–265. doi:10.1016/j.jbusvent.2010.09.003.
11. Brigham, K.H., Lumpkin, G.T., Tyge Payne, G., & Zachary, M.A. (2014). Researching long-term orientation: a validation study and recommendations for future research. Family Business Review, 27, 72–88. doi:10.1177/0894486513508980.
12. Brown, J.R., Martinsson, G., & Petersen, B.C. (2012). Do financing constraints matter for R&D? European Economic Review, 56, 1512–1529. doi:10.1016/j.euroecorev.2012.07.00710.1016/j.euroecorev.2012.07.007.
13. Brundin, E., Samuelsson, E.F., & Melin, L. (2014). Family ownership logic: framing the core characteristics of family businesses. Journal of Management and Organization, 20, 6–37. Copyright - Copyright ⒸCambridge University Press and Australian and New Zealand Academy of Management 2014; Last updated - 2015-11-23.
14. Canepa, A., & Stoneman, P. (2008). Financial constraints to innovation in the UK: evidence from Cis2 and Cis3. Oxford Economic Papers, 60, 711–730. doi:10.1093/oep/gpm044.
15. Chen, H.-L., & Hsu, W.-T. (2009). Family ownership, board independence, and R&D investment. Family Business Review, 22, 347–362. doi:10.1177/0894486509341062.
16. Chrisman, J.J., Chua, J.H., De Massis, A., Frattini, F., & Wright, M. (2015). The ability and willingness paradox in family firm innovation. Journal of Product Innovation Management, 32, 310–318. doi:10.1111/jpim.12207.
17. Chrisman, J.J., Chua, J.H., & Litz, R.A. (2004). Comparing the agency costs of family and non-family firms: conceptual issues and exploratory evidence. Entrepreneurship Theory and Practice, 28, 335–354. doi:10.1111/j.1540-6520.2004.00049.x.
18. Classen, N., Carree, M., Gils, A., & Peters, B. (2014). Innovation in family and non-family SMEs: an exploratory analysis. Small Business Economics, 42, 595–609. doi:10.1007/s11187-013-9490-z.
19. Cornell University, INSEAD and WIPO (2016). The Global Innovation Index 2016: Winning with Global Innovation, Ithaca, Fontainebleau, and Geneva: Cornell University, INSEAD, and the World Intellectual Property Organization.
20. Cosci, S., Meliciani, V., & Sabato, V. (2016). Relationship lending and innovation: empirical evidence on a sample of European firms. Economics of Innovation and New Technology, 25, 335–357. doi:10.1080/10438599.2015.1062098.
21. Crépon, B., Duguet, E., & Mairesse, J. (1998). Research, innovation and productivity: an econometric analysis at the firm level. Economics of Innovation and New technology, 7, 115–158.
22. Crespi, R., & Martin-Oliver, A. (2015). Do family firms have better access to external finance during crises? Corporate Governance: An International Review, 23, 249–265. doi:10.1111/corg.12100.
23. Czarnitzki, D., & Hottenrott, H. (2011). R&D investment and financing constraints of small and medium-sized firms. Small Business Economics, 36, 65–83.
24. D’Aurizio, L., Oliviero, T., & Romano, L. (2015). Family firms, soft information and bank lending in a financial crisis. Journal of Corporate Finance, 33, 279–292. doi:10.1016/j.jcorpfin.2015.01.002.
25. De Massis, A., Frattini, F., Pizzurno, E., & Cassia, L. (2015). Product innovation in family versus nonfamily firms: an exploratory analysis. Journal of Small Business Management, 53, 1–36. doi:10.1111/jsbm.12068.
26. Duran, P., Kammerlander, N., & van Essen, M. (2016). Doing more with less: innovation input and output in family firms. Academy of Management Journal, 59, 1224–1264. doi:10.5465/amj.2014.0424.
27. Freel, M.S. (2007). Are small innovators credit rationed? Small Business Economics, 28, 23–35. doi:10.1007/s11187-005-6058-6.
28. Gallo, M.A., & Vilaseca, A. (1996). Finance in family business. Family Business Review, 9, 387–401. doi:10.1111/j.1741-6248.1996.00387.x.
29. Gottschalk, S., Niefert, M., Licht, G., Wagner, S.C., Hauer, A., Keese, D., & Woywode, M. (2014). Volkswirtschaftliche Bedeutung von Familienunternehmen. report, Stiftung Familienunternehmen.
30. Hall, B.H. (2005). The financing of innovation, (pp. 409–430).
31. Hall, B.H., Moncada-Paternò-Castello, P., Montresor, S., & Vezzani, A. (2016). Financing constraints, R&D investments and innovative performances: new empirical evidence at the firm level for Europe. Economics of Innovation and New Technology, 25, 183–196. doi:10.1080/10438599.2015.1076194.
32. Hiebl, M.R.W. (2012). Risk aversion in family firms: what do we really know? The Journal of Risk Finance, 14, 49–70. doi:10.1108/15265941311288103.
33. Hottenrott, H., & Peters, B. (2012). Innovative capability and financing constraints for innovation: more money, more innovation? Review of Economics and Statistics, 94, 1126–1142. doi:10.1162/REST_a_00227.
34. Jensen, M.C., & Meckling, W.H. (1976). Theory of the firm: managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3, 305–360. doi:10.1007/978-94-009-9257-3_8.
35. Breton-Miller, L., Miller, I., & Miller, D. (2006). Why do some family businesses out-compete? Governance, long-term orientations, and sustainable Capability. Entrepreneurship Theory and Practice, 30, 731–746. doi:10.1111/j.1540-6520.2006.00147.x.
36. Matzler, K., Veider, V., Hautz, J., & Stadler, C. (2015). The impact of family ownership, management, and governance on innovation. Journal of Product Innovation Management, 32, 319–333. doi:10.1111/jpim.12202.
37. Mina, A., Lahr, H., & Hughes, A. (2013). The demand and supply of external finance for innovative firms. Industrial and Corporate Change, 22, 869–901. doi:10.1093/icc/dtt020.
38. Mohnen, P., Palm, F.C., Van Der Loeff, S.S., & Tiwari, A. (2008). Financial constraints and other obstacles: are they a threat to innovation activity? De Economist, 156, 201–214.
39. Myers, S.C., & Majluf, N.S. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13, 187–221. doi:10.1016/0304-405X(84)90023-0.
40. Naldi, L., Nordqvist, M., Sjöberg, K., & Wiklund, J. (2007). Entrepreneurial orientation, risk taking, and performance in family firms. Family Business Review, 20. doi:10.1111/j.1741-6248.2007.00082.x.
41. Nanda, R., & Kerr, W.R. (2015). Financing innovation. Annual Review of Financial Economics, 7, 445–462.
42. Nordqvist, M., & Melin, L. (2010). Entrepreneurial families and family firms. Entrepreneurship & Regional Development, 22, 211–239. doi:10.1080/08985621003726119.
43. Peters, B., Roberts, M.J., & Vuong, V.A. (2016). Dynamic R&D Choice and the Impact of the Firm’s Financial Strength. NBER Working Papers 22035, National Bureau of Economic Research, Inc.
44. Peters, B., & Westerheide, P. (2011). Short-term borrowing for long-term projects: Are family businesses more susceptible to ‘irrational’ financing choices? ZEW Discussion Papers 11-006, ZEW - Center for European Economic Research.
45. Petersen, M.A, & Rajan, R.G. (1994). The benefits of lending relationships: evidence from small business data. Journal of Finance, 49, 3–37.
46. Petersen, M.A, & Rajan, R.G. The effect of credit market competition on lending relationships. The Quarterly Journal of Economics, 110, 407–43.
47. Roodman, D. (2009). Estimating fully observed recursive mixed-process models with Cmp. Technical report, Available at SSRN 1392466.
48. Roodman, D. (2014). CMP: Stata module to implement conditional (recursive) mixed process estimator. Boston College Department of Economics, Statistical software components.
49. Schäfer, D., & Talavera, O. (2009). Small business survival and inheritance: evidence from Germany. Small Business Economics, 32, 95–109.
50. Schäfer, D., Werwatz, A., & Zimmermann, V. (2004). The determinants of debt and (private) equity financing: the case of young, innovative SMEs from Germany. Industry and Innovation, 11, 225–248. doi:10.1080/136627104200026539310.1080/1366271042000265393.
51. Silva, F., & Carreira, C. (2012). Do financial constraints threat the innovation process? Evidence from Portuguese firms. Economics of Innovation and New Technology, 21, 701–736. doi:10.1080/10438599.2011.63997910.1080/10438599.2011.639979.
52. Steijvers, T., & Voordeckers, W. (2009). Private family ownership and the agency costs of debt. Family Business Review, 22, 333–346. doi:10.1177/0894486509338291.
53. Stigler, G.J. (1967). Imperfections in the Capital Market. The Journal of Political Economy, 75, 287–292.
54. Stiglitz, J.E., & Weiss, A. (1981). Credit rationing in markets with imperfect information. American Economic Review, 71, 393–410.
55. Villalonga, B., & Amit, R. (2006). How do family ownership, control and management affect firm value? Journal of Financial Economics, 80, 385–417. doi:10.1016/j.jfineco.2004.12.00510.1016/j.jfineco.2004.12.005.
56. Zellweger, T., & Sieger, P. (2012). Entrepreneurial orientation in long-lived family firms. Small Business Economics, 38, 67–84. doi:10.1007/s11187-010-9267-6.