- While the numbers suggest that family businesses tend to invest less in innovation, they also suggest that – particularly in the later generations – family businesses tend to be substantially more efficient with the investments they do make.
- The close relationships of owners and managers in many family businesses actually provide a better environment for risk-taking and mistake-making than one might find in a business where employees and managers are constantly being reviewed on their short term performance.
- Multi-generational family businesses benefit from an impressive institutional knowledge about their company and industry. While this could result in a mentality of “we do it this way because we have always done it this way”, it also equips them to better understand long-term trends and to avoid the pitfalls that might trip up their competitors.
As with many things, the study suggests that the characteristics that tend to come with a family business are not altogether good or altogether bad. When a family has the perspective to capitalize on its strengths, it can be competitive in any arena or aspect of business – including innovation.
Read the full story, “Research: Family Firms Are More Innovative Than Other Companies” by Nadine Kammerlander and Marc van Essen, here.
Drew Steen is a business transactions attorney at Davis Wright Tremaine, LLP. He represents both buy-side and sell-side clients in mergers and acquisitions, venture capital investments, joint ventures, equity co-investments and restructurings. He also serves as regular corporate counsel for several closely-held and family-owned companies. Drew can be reached via email at firstname.lastname@example.org or directly at 206.757.8081.