The M.Sc. in Finance and the Centre for Strategic Financial Management are pleased to sponsor presentations on Family Entrepreneurship on February 7 and 8, 2013:

Dr. Alfredo De Massis and Dr. Josip Kotlar from the Department of Economics and Technology Management at the University of Bergamo, Italy, will be presenting a research seminar on Technology Adoption Among Family Firms. Their talk will be based on the following 3 papers:

“Research on Technological Innovation in Family Firms: Present Debates and Future Directions”

by Alfredo De Massis, Federico Frattini and Ulrich Lichtenthaler

Abstract

The purpose of this article is to review and systematize prior work on technological innovation in family firms and to open up an agenda to guide future research into this promising area. The study shows that family involvement has direct effects on innovation inputs (e.g., R&D expenditures), activities (e.g., leadership in new product development projects), and outputs (e.g., number of new products), as well as moderating effects on the relationships between these steps of technological innovation. The article uses theories applied in family business research (e.g., agency theory) to discuss opportunities for extending technological innovation frameworks by considering family involvement.

“Product Innovation in Family vs. Non-Family Firms: an Exploratory Anaysis”

by Alfredo De Massis, Federico Frattini, Emanuele Pizzurno and Lucio Cassia

Abstract

How family firms manage product innovation remains an overlooked topic in existing business research. This happens despite the fact that family businesses play a crucial role across all economies and they often use technological innovation to nurture their competitive advantage. By drawing upon the resource-based view of the firm as well as agency, stewardship and behavioral theories and using empirical evidence gathered through a multiple case study, the paper studies how and why the anatomy of the product innovation process differs between family and non-family firms. The analysis shows that family businesses  differ from non-family ones as regards product innovation strategies and organization of the innovation process.

“Technology Acquisition in Family and Non-Family Firms: A Longitudinal Analysis of Spanish Manufacturing Firms”

by Josip Kotlar, Alfredo De Massis, Federico Frattini, Mattia Bianchi and Hanqing Fang

Technology acquisition from external sources has been identified as a critical competence for sustained success in innovation and research has paid a good deal of attention to studying its advantages, drawbacks, determinants and outcomes. Traditionally, research has modeled the choice to acquire technology from outside a firm’s boundaries using a transaction cost theory perspective. Accordingly, this strategic decision is the result of a trade-off between the benefits of external acquisition, e.g., higher return on investment, lower costs, increased flexibility, access to specialized skill sets and creativity, and its drawbacks, e.g., opening the market to new entrants, risk of imitation of core competencies and reduced value appropriability. Yet, this view does not capture the behavioral considerations that may potentially encourage or discourage managers from sourcing technology outside the firm’s boundaries. This behavioral aspect is especially important if one wants to understand the conduct in external technology acquisition of family firms, which are defined as those firms whose decision making is driven by the family vision for how the firm will benefit the family across generations. Indeed family firms have been found to favor strategic actions that preserve the controlling families’ control and authority over business, even at the cost of giving up potential economic benefits, suggesting that external technology acquisition is likely to be interpreted differently in family and non-family firms.  Despite its importance, how the involvement of a controlling family affects decisions in technology and innovation management and, specifically, external technology acquisition, is an overlooked topic in extant research and requires further theoretical and empirical analyses. This study attempts to fill these gaps by extending the tenets of the behavioral agency model (BAM) and prior research pointing to particularistic decision making in family firms to uncover the behavioral drivers of external technology acquisition in family and non-family firms.  We formulate theory that relates performance risk, family management and the contingent effect of the degree of technology protection on external technology acquisition, and test the hypotheses with longitudinal data on 1,540 private Spanish manufacturing firms. Our analysis shows that managers are more likely to acquire technology from external sources through R&D contracting when firm performance falls below managers’ aspirations. We also find that family firms are more reluctant to acquire external technology, and the effect of negative aspiration performance gaps becomes less relevant as family management is higher, which we attribute to family firm managers’ attempts to avoid losing control over the trajectory that technology follows over time. However, family firms become more favorable to consider the adoption of an open approach to technology development when some protection mechanisms (specifically, the filing of patents on the firm proprietary technologies) increase the managers’ perceptions of control over the technology trajectory.  As such, our study makes a contribution to the understanding of the behavioral factors driving external technology acquisition, and it offers important insights regarding technology strategy in family firms.