A 10-Year Longitudinal Investigation of Strategy, Systems, and Environment on Innovation in Family Firms

Although the role of innovation has been studiedin large and publicly traded firms, its role in family owned firms has beenlargely overlooked. By means of a longitudinal study, this article examines therole of innovation in family firms with respect to organizational life stage.The research sought to understand: (1) the relationship between competitive environment, firm structure, information acquisition systems, and innovation, and (2) how these change over time. In 1991, 278 Australian family-owned firms were surveyed. Data on competitive environment, strategies, innovation, structure, information structure, and life stage were collected. In 2001, 67 usable responses from the original group were collected, gathering data for the same variables. It was found that there is a positive relationship between innovation andtechnoeconomic uncertainty, and little association of innovation with competition and constraints. No support was found for linkages between innovation and organizational structure in family firms. Findings suggest established family firms place importance on innovation practices and strategy.There are interactions between innovation strategy and environmental uncertainty and scope and timeliness of information acquisition and use. Also,life stage influences both the level of innovation and its relation to information acquisition. (TNM)