Stodgy? Not! Research shows family businesses out-innovate the competition

Are Family Firms Innovative?

Family businesses have a reputation for being more conservative and tradition-bound than their non-family counterparts. But new research demonstrates that in many ways, they’re more innovative.

That’s the focus of the Fall 2015 issue of the California Management Review, which also includes a case study by Prof. Laura Tyson and Haas Social Impact Fellow Jennifer Walske.

Family firms—a heterogeneous group that includes mom-and-pop shops as well as giants like Wal-Mart, Bechtel & Ford—are able to tap into unique resources: family assets. Those include a brand legacy and shared values that are often established over the course of many generations. Rival firms scramble to create similar assets, without the same quality of family connections.

Articles exploring family businesses in the new issue include a study on how family-owned airline Climber, based in Denmark, managed industry turbulence over 60 years, as well as a system to assess “innovation readiness,” allowing firms to prepare in the early stages before rolling out new processes or technologies.

The case study co-authored by Tyson and Walske explores the challenges for Fair Trade USA, which is the leading third-party certifier of fair trade products in North America. Yet despite its 55 percent brand recognition among US consumers in 2014, the $10 million dollar non-profit currently certifies less than six percent of all coffee consumed in the U.S. There’s ample room for Fair Trade’s CEO  to increase market penetration, say Tyson—director of the Institute for Business & Social Impact at Berkeley-Haas—and Walske.

Watch the CMR video on Family-Driven Innovation here.

The full issue is now available online and on the Haas campus.

Condensed versions of each of these articles are available through the CMR Executive Digest initiative.

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