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International Journal of Business, Economics and Management

June 2019, Volume 6, 5, pp 289-302

Family Leadership and Small to Medium Sized Enterprises Research and Development Investments

Zhichuan Li

Zhichuan Li¹

School of Economics and Finance, Shanghai International Studies University, Shanghai, P. R. China. ¹

on Google Scholar

Li Zhichuan

on PubMed

Li Zhichuan

Pages: 289-302

DOI: 10.18488/journal.62.2019.65.289.302

Article History:

Received: 09 May, 2019
Revised: 14 June, 2019
Accepted: 23 July, 2019
Published: 13 September, 2019

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Abstract:

Family businesses are the most widespread and ancient of all economic entities, and the vast majority of small to medium-sized enterprises (SMEs) in every country re family owned. In consequence, their innovation and productivity are critical to economic growth. However, current academic research tends to focus on large, high-profile corporations, with few studies of SMEs. Further, the relationship between family leadership and SMEs’ innovation capability has been likewise neglected. This study aims to investigate the effects of family leadership on an enterprise’s investment in innovation within the context of small firms based on the European Firms in a Global Economy (EFIGE) survey data and relavent literature. By utilizing the ordinary least squares (OLS) model with several robust checks, the empirical results indicate that innovation investment behavior is more complex and multifaceted with respect to family leadership and firm size. On the one hand, family Chief Executive Officers (CEOs) generally exhibit a greater performance in innovation than non-family CEOs. On the other, family leaders in small firms do conduct less innovation investment.

Contribution/ Originality
This study contributes to the existing literature mainly in two aspects. First, our work theorizes as to why family leaders are either conducive or obstructive of innovation investment. Second, we utilize a unique survey dataset to investigate empirically the nexus between family CEOs and firms’ research and development (R&D) activities, especially for small firms.

Keywords:

Family leadership, SMEs, Innovation, R&D intensity.

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