Entrepreneurial innovation has been the most important source for improvement in firm performance. Innovation in family firms has become the focal issue in firm strategy. In today’s high-velocity environment, the dynamic organizational adaptation is essential for sustainable competitive advantage. The purpose of this paper is to investigate the nature of changes in external environment and the relationship between changes in the economic environment and family firms’ innovation in response to the environmental shift.
The authors designed a survey questionnaire to obtain primary data for the study. The survey consists of family firm structure, innovation drivers, governance, core competence and performance. Authors applied a random stratified sample method in selecting samples to reflect the population in family firms.
The study identified market conditions, technology and regulation as innovation drivers. The authors found that these innovation drivers have positive effects on family firm performance, although the technology variable is the only statistically significant variable at the conventional statistical significance level.
The authors expected to have better response rate, and wish to have more observations. The authors would have stronger results if you could get more data.
Family firms need to respond to the high velocity of environment and to develop capabilities that understand the nature of changes in economic environment and take effective steps. The study findings offer guidelines for the managers of how to manage the firms in the dynamic environment.
Family firms should use this results to develop strategies to deal with various economics situations.
The study identifies innovation drivers in family firms. The study contributes to finding and empirical testing of family firm innovation drivers. Findings of the study are valuable for managing the high velocity of today’s economic environment: changes in markets, technologies and regulations.
