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In recent studies, family firms have been shown to innovate less despite being more able to do so – namely the “ability and willingness paradox”. Family businesses are required to understand how to solve the ability and willingness paradox to unlock the innovation potential of their organizations.
Cohesion and Goal Diversity
Valuable insights about how family firms can address the innovation paradox can be found in family science. In integrating family science and innovation management theory, two major dimensions emerge as crucial to understanding family firms’ innovation attitudes: cohesion and goal diversity.
Cohesion consists in emotional bonding that family members have towards one another. The construct of cohesion focuses on how family systems balance the separateness of their members versus togetherness, and distinguishes separated (low) and connected (high) levels of cohesion. Moreover, evidence from previous studies questions the implicit assumption in family business research that members of the controlling families share common aspirations and values, therefore pursuing homogeneous goals.
Family members embrace a wider spectrum of individual goals, captured in the construct of goal diversity – the distribution of goals among the organizational members contributing to decision making in a family business can be captured by the width of the range of organizational goals actively pursued by members of a family business. We thus distinguish high and low levels of goal diversity.
Four Innovation Attitudes
Due to the strong link between behaviours and aspirations of the family firm, our experience in examining innovation behaviour of a number of family firms indicates that goal diversity and cohesion influence the willingness of family firms to innovate by shaping their attitude. A taxonomy of four family firms’ innovation attitudes can be outlined along the two dimensions of cohesion (separated, connected) and goal diversity (high, low). Family businesses with low goal diversity and separated cohesion typically exhibit an innovation attitude defined as
Family businesses with low goal diversity and separated cohesion typically exhibit an innovation attitude defined as Improvers. In these firms, such as Marinelli and In-N-Out Burger, family members strive for independence by improving strengthening the extant business.
Traditionalists attitude is oriented toward similar goals (low goal diversity), but the connected cohesion among family members keeps the business oriented toward “keeping doing what we are able to do”. Ce De Candy (Smarties) and McIlheny (Tabasco) are examples of family firms with this attitude. The third innovation attitude involves
The third innovation attitude involves high level of goal diversity, therefore individual members of the family strive for heterogeneous goals, but the connected cohesion keeps the innovation attitude toward a path coherent with the actual business. We named this category Exploiters, including for example Marriott Hotel and Beretta.
Finally, due to the high goal diversity and separated cohesion, family firms show an attitude defined as Explorers, as family members look for their independence and pursue individual goals looking for new opportunities more often in different markets or sectors to distance themselves from the nest. Examples of family firms falling within this category are Fiat Chrysler Automobile and Hilton Hotel.
The four innovation attitudes that we have identified indicate four possible patterns through which family firms can solve the ability and willingness paradox and unlock the innovation potential of their firm. It is important for family business owners and managers to carefully consider what is the innovation attitude of their firm and to act on specific family aspects in terms of cohesion and goal diversity if they aim to change such attitude. For example, if the family firm’s attitude is Explorer, and firm leaders want to turn it into a Traditionalist, they can do so by reducing goal diversity, which could be done for instance by introducing goal setting practices within the family firm.
Moreover, prior research has indicated that the imminence of an intra-family succession triggers unfreezing processes in relation to the previously stabilized goals and re-stabilization of new organizational goals, and activates social interactions that increase goal diversity and separated cohesion. In relation to our proposed taxonomy, this means that succession offers a remarkable opportunity for family firms to change their innovation attitude.
This article is part of the special series of articles on “Secrets of Family Business Innovation” developed with the great support from researchers at Lancaster University Management School’s Centre for Family Business and Free University of Bozen-Bolzano’s Platform on Family Business Management. See Part 1: Unlocking the Innovation Potential of Family Firms
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Kotlar, J., & De Massis, A. (2013). Goal setting in family firms: Goal diversity, social interactions, and collective commitment to family-centered goals. Entrepreneurship Theory and Practice, 37(6), 1263-1288.
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