THE IMPACT OF LONG-TERM ORIENTATION ON FAMILY FIRMS’
INNOVATION: A MULTIPLE CASE STUDY
ABSTRACT
Drawing on Lumpkin and Brigham’s (2011) conceptual long-term orientation (LTO)
framework, we engage in multiple case study research to explore how family firm
innovation manifests via the LTO dimensions: futurity, continuity, and perseverance. In
stage one of our study, we focus on five in-depth family business case studies to determine
relationships between innovation and LTO. In stage two, these relationships are tested for
robustness in a larger sample study of 28 multi-generational family firms. Our findings
suggest that innovation is synonymous with futurity, and when combined with continuity
(i.e., preservation innovation), perseverance (i.e., patient innovation), or both continuity
and perseverance (i.e., legacy innovation), it is the driving force of sustainability of family
firms.
Keywords
Long-term orientation, innovation, family firms, qualitative research
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INTRODUCTION
Family firms manage for the long run (Miller & Le Breton-Miller, 2005). They
have a long-term perspective rooted in transgenerational goals (Miller & Le-Breton
Miller, 2005), a stewardship orientation (Miller & Le Breton-Miller, 2006), longer CEO
tenures (Lansberg, 1999; Miller, Le Breton-Miller & Scholnick, 2008), intentions to pass
the business to successive generations (Chua, Chrisman, & Sharma, 1999, Poza 2007), an
interest in building family legacy (Ward, 2004), and longer investment horizons
(Anderson & Reeb 2003; Sirmon & Hitt, 2003; Zellweger, 2007). In effect, family firms
have a long-term orientation (LTO), which is defined as the propensity of a firm to engage
in long-term actions that materialize after an extended period of time (Lumpkin &
Brigham, 2011). Having a longer-term view impacts behavior generally (Brigham,
Lumpkin, Payne & Zachary, 2014) and, more specifically, that behavior related to
innovation (Ingram et al., 2014; Classen, Carree, Van Gils, & Peters, 2014; c, Combs, &
Rau, 2015; Kammerlander, Dessì, Bird, Floris, & Murru, 2015; De Massis, Di Minin, &
Frattini, 2015). So, while extant research suggests that LTO bestows competitive
advantages on family firms (Le Breton-Miller & Miller, 2006) and contributes positively
to their survival and financial performance (Bau, Hellerstedt, Nordqvist, & Wennberg,
2013), there is limited understanding of the drivers of such links (Sharma, Salvato, &
Reay, 2014). Innovation, an integral driver of the longer-term orientation of family firms,
is the focus of this study.
To increase our understanding, this study draws on Lumpkin and Brigham’s
(2011) three-dimensional LTO construct (i.e., futurity, perseverance, continuity) to
explore how innovation manifests in long-term orientated family firms. Our results reveal
that, of the three LTO dimensions, futurity is most synonymous with innovation. Further,
we reveal situations when futurity combines with (1) continuity, categorized as
2
preservation innovation, (2) perseverance, categorized as patient innovation, and (3)
continuity and perseverance, categorized as legacy innovation.
We claim several important contributions. First, for LTO we move from theory
building to theory testing by developing this conceptual construct empirically (Colquitt
& Zapata-Phelan, 2007). As we reveal how manifestations of innovation in family firms
differ along the three dimension of LTO, our study also contributes to the understanding
of the heterogeneous nature of family enterprises (Chua, Chrisman, Steier, & Rau, 2012;
Kraiczy, Hack, & Kellermanns 2014). This line of reasoning is distinguished from current
conversations, in which innovation is most often categorized more broadly (e.g., process
or product, radical or incremental), by highlighting how innovation has different temporal
characteristics (Sharma et al., 2014).
The next section introduces the theoretical foundation. Then, we explain the twostage process that we followed to explore our research question. Specifically, we detail
the five in-depth family business case studies that we analyzed to determine relationships
between innovation and LTO and how we further tested these relationships in a larger
sample study of 28 multi-generational family firms. We then share the four categories
that we distilled and include excerpts of the many interviews we conducted. In the closing
section, we discuss our findings, outline what we see as the limitations of our study, and
invite further research.
THEORETICAL BACKGROUND
Long-Term Orientation
Time considerations influence how firms make decisions and take action
(Mosakowsky & Early, 2000). Prior research has explored the role of time in a range of
contexts including temporal orientation as a cultural value (Hall & Hall, 1990; Hofstede,
1980, 2001), time and entrepreneurial risk-related behavior (Das & Teng, 1997), time
3
orientation in buyer-seller relationships (Ganesan, 1994; Garbarino & Johnson, 1999),
and long-term relationship evaluation on the part of manufacturers and suppliers
(Kalwani & Narayandas, 1995; Ryu, Park, & Min, 2007). Time has also been a salient
concept in the strategic planning literature, particularly in relation to planning horizons
and scenario planning (Das, 1991; Ramaprasad & Stone, 1992; Schoemaker, 1993). A
frequently referenced conceptual dimension in organizational decision-making focuses
on short-term versus long-term orientations (Laverty, 1996). A short-term perspective
implies that strategic decisions focus on present conditions and near-term financial gain
(Jacobs, 1991), while a long-term perspective suggests prioritization of long-range
implications (Le Breton- Miller & Miller, 2006). While long- and short-term perspectives
may not be mutually exclusive, they typically follow different strategic priorities and
require different organizational processes (Hamel & Prahalad, 1994).
Time-sensitive decisions are especially relevant to multi-generational family
firms (Anderson & Reeb, 2003), due to, for example, their interest in legacy and lasting
values (Ward, 2004), and their capacity to build enduring relationships (Arregle, Hitt,
Sirmon, & Very, 2007). Extant studies have introduced the concept of long-term
perspective in family firms using terms such as extended time horizon (Zellweger, 2007),
long-term investment and ownership horizons (James, 1999), long-term financial goals
(Anderson & Reeb, 2003), long-term orientation (Gomez-Mejia, Haynes, Nuñez-Nickel,
Jacobson, & Moyano-Fuentes, 2007; Zahra, Hayton, & Salvato, 2004) and ‘managing
for the long run’ (Miller & Le Breton-Miller, 2005). These studies assume that family
firms tend to emphasize the long-term implications of strategic decisions and actions, and
therefore reflect certain antecedents and outcomes (Zachary, Brigham, Payne, &
Lumpkin, 2012). Hence, a family perspective and, in particular, the presence of multiple
4
generations, inevitably expands the temporal horizon of the strategic decisions in family
firms (Sharma et al., 2014).
Embedded in the organizational mind-set of the firm, long-term orientation (LTO)
refers to the tendency to prioritize the long-term implications of actions and decisions
(Lumpkin & Brigham, 2011). Although all family firms do not necessarily embrace a
long-term orientation, it is generally agreed that family businesses are more likely to be
long-term oriented than non-family firms (Gomez-Mejia et al., 2007; Kellermanns,
Eddleston, Barnett, & Pearson, 2008). However, studies applying the behavioral agency
model (BAM) are inconsistent with the accepted premise that family firms have a longterm investment orientation (e.g., Berrone, Cruz, Gomez-Mejia, & Larraza-Kintana,
2010; Gómez-Mejía et al., 2007; Gomez-Mejia, Makri, & Larraza-Kintana, 2010). These
studies suggest that that the primary driver of strategic decision-making in family firms
is the loss of socioemotional wealth (SEW) and that family firms might avoid risky
decisions which might decrease socioemotional wealth. Therefore, these scholars posit
that family firms follow strategies that are control-oriented rather than long-term oriented.
A recent study by Chrisman and Patel (2012), proposes that the family firm’s tendency
to engage in long or short-term investment horizons depends on whether the family aims
to preserve SEW in the short-term, or to maintain the longevity of the firm and the transfer
of control to subsequent generations.
LTO has been introduced as a way to capture the advantages and benefits
potentially enjoyed by families in business as a result of how they perceive time (Miller
& Le-Breton Miller, 2005). This approach is consistent with other family business
research such as works on ‘familiness’ (Habbershon, Williams, & MacMillan, 2003) and
‘particularistic behavior’ (e.g., Carney 2005), which identify idiosyncratic attributes—
such as the temporal orientation of family firms (Dodd, Anderson, & Jack, 2013)—that
5
are unique to family firms and help explain their behavior. Drawing on the conceptual
LTO framework of Lumpkin and Brigham (2011), we adopt LTO as a multidimensional
concept comprising three dimensions: futurity, continuity, and perseverance.

Futurity involves evaluating the long-term consequences of decisions and actions
with the belief that planning and forecasting for the future is valuable for the firm
(Lumpkin & Brigham, 2011). Firms exhibiting futurity typically focus on achieving
goals or outcomes that have been pre-determined (Venkatraman, 1989). This futurity
mind-set is expected to be more prevalent in family firms than their non-family
counterparts, in part because of their attention to succession planning (Davis &
Harveston, 1998; Sharma, Chrisman, & Chua, 2003), and, relatedly, their
transgenerational family control intentions (Chrisman, Chua, Pearson, & Barnett,
2012).

Continuity focuses on the importance of decisions and actions that are long lasting. It
is a key component of LTO because it emphasizes the constancy needed to pursue an
enduring mission and the value of preserving reputations for the longevity of a
business. Continuity is important to family firms because it takes into account the
possibility that a family’s legacy will affect future decisions (Lumpkin & Brigham,
2011) and may impact the family’s intentions to keep the business within the family
(Lansberg, 1999).

Perseverance is based on the belief that efforts made today will be valuable in the
future because of their importance in generating long-term rewards (Brigham et al.,
2014). While perseverance is needed for the day-to-day survival of a firm, its effect
creates value over time (Lumpkin & Brigham, 2011). Relative to non-family firms,
perseverance and long-term rewards are common in family businesses, as reflected in
their attitude towards professionalization of management (Moores & Craig, 2006),
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and their willingness to use patient capital (Jacobs, 1991; Sirmon & Hitt, 2003) and
make longer-term investments (Zellweger, 2007).
Innovation
Firms can develop their competitiveness and improve performance by embracing
innovation and entrepreneurship. Often, family firms can choose to allocate resources
and make investments that promote innovation with a longer-time horizon (Chirico &
Bau, 2014). However, not all family firms behave the same. In fact, debate continues
regarding the extent to which the unique characteristics of family firms foster or hinder
entrepreneurial behavior (Chirico, Sirmon, Sciascia, & Mazzola, 2011). Some scholars
suggest that family businesses provide an environment that promotes entrepreneurial
activities (e.g., Aldrich & Cliff 2003; Litz, 1995; Rogoff & Heck, 2003); other
researchers, in contrast, have argued that family firms are risk averse, reluctant to
innovate and slow to change (e.g., Gomez-Mejia et al., 2007; Kets de Vries, 1993; Naldi,
Nordqvist, Sjoberg, & Wiklund, 2007).
Defining innovation is difficult. We adopt the definition of Thompson (1965) who
suggests that innovation is concerned with generating, adopting, and implementing new
ideas, processes, products, or services. The associate behavior necessary to deliver
innovation underpins firm survival (Ahuja, Lampert & Tandon, 2008; CarrascoHernandez & Jimenez-Jimenez, 2013; Dibrell, Craig, & Neubaum, 2014; Kleinschmidt
& Cooper, 1991; Schumpeter, 1942; Lumpkin & Dess, 1996; Rauch, Wiklund, Lumpkin,
& Frese, 2009; Wang 2008; Wiklund & Shepherd 2005). Such activity ultimately drives
competitive advantages (Greve, 2009; Lumpkin & Dess, 1996; Slevin & Covin, 1995)
and superior firm performance (Hurley & Hult, 1998; Tsai & Yang, 2012).
In the context of family firms, prior research has tried to understand how family
firm idiosyncrasy influences innovation (e.g. Konig, Kammerlander, & Enders, 2013;
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Kotlar, De Massis, Frattini, Bianchi, & Fang, 2013). However, the results addressing
relationships between family firms and innovation are inconclusive and inconsistent (De
Massis, Frattini, & Lichtenthaler, 2013). Some studies have concluded that family firms
have certain objectives (Gomez-Mejia et al., 2007, 2010) or certain control rights over
the firm (Block, 2012; Schulze, Lubatkin, Dino, & Buchholtz, 2001) which influence
decisions that shape the input and outcome of innovation activities (De Massis et al.,
2013). For instance, some scholars suggest that family firms which use non-economic
performance indicators as reference points might invest less in R&D (Chrisman & Patel,
2012) and might be more reluctant to acquire external technology (Kotlar et al., 2013).
Moreover, the capital constraints imposed by family ownership structures (Carney, 2005)
and the family firm’s strong desire to keep the business in the family for multiple
generations (e.g., Miller, Le Breton-Miller, Lester, & Cannella, 2007; Kellermanns,
Eddleston, Sarathy, & Murphy, 2012) can prevent a family firm from investing in
innovative activities that might result in failure or loss of assets.
On the other hand, family firms possess the decision-making capabilities, power,
and flexibility that enables them to undertake innovative activities (Miller & Le BretonMiller, 2005), such as long-term goals (Ward, 1997; Miller & Le-Bretton Miller, 2005;
Bhide, 2000), low levels of bureaucracy (Kets de Vries, 1993), flexibility of
organizational structures (Craig, Dribell & Davis, 2008), perceived organizational
support (Bammens, Notelaers, & Van Gils, 2015) and loyal employees (Duran,
Kammerlander, Van Essen, & Zellweger, 2015). Furthermore, innovativeness has been
linked to stronger performance outcomes in family firms, when driven by strategic
decision-making and long-term perspectives (Kellermanns et al., 2008; McCann et al.,
2001). For instance, there is evidence that executives in family firms with a long-term
8
orientation have additional incentive to enhance new product portfolio performance
(Kraiczy, Hack & Kellermanns, 2014).
This overview of the literature has highlighted that studies focused on time-related
variables such as family firms’ long-term orientation are “exceptions rather than the
norm” (Sharma, Salvato, & Reay, 2014, p. 10) and that the existing studies lack
systematic empirical evidence (Bennedsen & Foss, 2015).
METHOD
Data and Sample
We used a qualitative exploratory case study approach with purposive sampling
to understand how family firms’ innovation occurs within the LTO framework
(Eisenhardt, 1989; Handler, 1989; Nordqvist, Hall, & Melin, 2009; Yin, 2009). Case
studies are suitably appropriate for understanding behaviour within a particular context
as they provide a holistic view of the phenomenon of study (Yin, 2003). In fact, we follow
recent calls to apply more qualitative approaches to family firm research (Chenail, 2009;
De Massis & Kotlar, 2014; Reay & Zhang, 2014) and adopt a case study approach to
examine innovation in family firms and the notion of temporality through the integration
of LTO.
We followed a two-stage research approach that involved a sample of 33 familyfirm participants in the Successful Transgenerational Entrepreneurship Practices (STEP)
research project. The STEP project is a global research initiative analyzing
entrepreneurship in multi-generational family firms. STEP seeks to investigate the impact
of resources and entrepreneurial attitudes on financial, entrepreneurial, and social
performance outcomes across family-firm generations. For a family firm to be part of the
STEP project, it must meet the following criteria: (1) The owning family must see their
9
business as a family business; (2) the family must hold majority ownership in the main
operating business; (3) there must be at least one active operating business; (4)
generational involvement in ownership and/or management must span at least two
generations; (5) the main operating business must employ at least 50 employees; and (6)
the owning family must have an ambition to pass on the business to the next generation
(Nordqvist & Zellweger, 2010).
Data Collection
Data from 33 cases over two stages constituted the empirical basis for this paper.
Stage one included 34 exploratory interviews from five Irish family firms; Stage two
involved 28 completed case studies from the STEP project. An overview of the 33 firms
is provided in Table 1 and Table 3.
-------------------------------=
Insert Table 1 About Here
-------------------------------Stage one involved 34 semi-structured interviews with owners and family
members active in the business, non-family executives, and board members; each of whom
were asked open-ended questions concerning the firm, the individuals within the firm, and
the influence of the family on the management of the firm (see Table 2). Prior to the
interviews, secondary sources such as company publications, company and industry reports,
newspaper articles, company videos, and company websites were used to gather data and to
familiarize the authors with the company histories and activities. Interviews were conducted
according to the STEP semi-structured interview guidelines. The interview guide, developed
by a team of senior scholars in the area of entrepreneurship and family business research,
includes questions regarding long-term vision and entrepreneurial orientation, amongst
others. Further guided questions were used to investigate the long-term orientation of the firm
10
(for the abbreviated interview protocol see Appendix A). Each interview ranged from
between 45 and 90 minutes in length and was recorded and transcribed verbatim. After each
round of interviews, the authors took notes and a report was produced to gather observations
and feelings of the participants. Overall, we analyzed 29 hours of interviews captured by 615
pages of interview transcripts. Field notes, emails and informal conversations complemented
the taped interviews. In addition, we asked members of the management teams to supply
company documents and family information as available.
-------------------------------=
Insert Table 2 About Here
-------------------------------To establish the robustness of the themes and tendencies being observed, we
established a second stage which involved the detailed examination of 28 STEP case
studies. This enabled a cross validation of the constructs in a greater variety of family
firms (see Table 3). We drew cases from the STEP case pool, which contains more than
100 case studies, for theoretical sampling (Eisenhardt & Graebner, 2007; Yin, 2009).
Based on our initial knowledge of STEP case studies, we selected the content-rich cases
on family firms with explicit long-term orientation and innovative activities. Since all
STEP firms are required to be in at least their second generation, the cases are considered
to have long-standing histories and traditions.
Stage two case reports ranged from 20 and 73 pages in length and included
detailed quotes. The 28 cases came from a variety of countries, reflecting the global nature
of the phenomenon and helping to reduce cultural biases (Sharma & Manikutty, 2005).
-------------------------------=
Insert Table 3 About Here
--------------------------------
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Data Analysis
The analysis involved several steps. In the initial step, two authors used existing
theory and prior research to identify key concepts as initial coding categories (Kyngas &
Vanhanen, 1999; Potter & Levine-Donnerstein, 1999). We developed operational
definitions of LTO and innovation, carefully reviewed all the transcripts and cases, and
highlighted quotes (Miles & Huberman, 1984) from text that appeared to reflect a longterm perspective and innovative behavior. Clarification of the assembled concepts was
determined by an additional author.
In the second step, two researchers established subcategories for LTO: futurity,
continuity, and perseverance. We employed the content analysis developed by Brigham
et al. (2014) to support our coding and identified key works used to describe these
subcategories. Accordingly, the data coded was mirrored by information obtained from
other sources such as the firm’s website, industry reports and press articles. Each
innovation activity was classified with regard to its association with LTO. We first laid
out the innovation types that emerged from various combinations of the LTO dimensions:
futurity, continuity, and perseverance. Using Agle, Mitchell and Wood’s (1986) seminal
approach, we proceeded to categorize the data into seven types - three possessing only
one dimension, three possessing two dimensions, and one possessing all three
dimensions, as shown in Figure 1. Categorizing the data in this way revealed that futurity
is synonymous with innovation.
------------------------------Insert Figure 1 About Here
-------------------------------At times, the revisited data did not fit well into a category, which led to continuous
revisions of the data and codes. Each recurrence further enriched our conceptual
12
understanding. To ensure consistency of coding, especially as multiple coders were
involved, we developed a coding manual, which included definitions of each category
and examples (Weber, 1990). Our approach to content analysis enabled us to make
connections between our data and theory. Coding sample text, checking coding
consistency, and revising the coding manual is an iterative process and, as such, was
continued until sufficient coding consistency was achieved (Weber, 1990). Our team
included five members who specialize in entrepreneurship in family business (two PhD
students, an assistant professor, an associate professor, and a full professor), and this
increased the reliability of the coding while ensuring divergent perspectives. The steps of
analysis were done independently by two team members, who met periodically to
compare their individual interpretations. Initial discrepancies between interpretations
were debated with the rest of the team members to reach consensus.
In the next stage of analysis, we engaged in a cross-case analysis. We used
replication logic and investigated the similarity (or lack thereof) of patterns across the
cases (Strauss & Corbin, 1998). The cross-case analysis enabled us to review how LTO
dimensions are associated with innovation and to identify patterns between cases. After
the cross-case analysis, we reexamined the transcripts and the cases to ensure the
emerging findings were consistent with the data.
FINDINGS
The possible combinations of the LTO dimensions and our emergent categories
are shown in Figure 1. Note four distinct groups: (1) futurity; (4) futurity and continuity,
(5) futurity and perseverance, and (7) futurity, continuity and perseverance. In the
following, we present our findings based on the four groups.
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(1) Futurity: long-term innovation
Our first observation was that futurity is synonymous with innovation. When a
firm is concerned with generating, adopting, and implementing new ideas, processes,
products, or services, that concern is aimed towards the creation of future value.
Typically, innovations come to fruition after a certain length of time, hence they, are
characterized by futurity. It is reasonable to assume, given this close association, futurity
is at the heart of innovation. The following two quotes provide exemplary evidence of
futurity in innovations undertaken by our family firms:
“All around Ireland what's required now is to upgrade your septic tanks. There are
about 500,000 houses to be upgraded in Ireland. Every one of them is going to need
a slightly different solution. We are coming up with different types of products for
different options and applications, and you can have one of these, and two of these,
or you can have this and this together for this application.” (Deputy MD, case B)
“We put in place the plan to improve, we did some research and we introduced a
range of convenient new products to address that particular niche. Then at the same
time some trends, which we had been anticipating, crossed from the US to the UK
and Ireland about all the health benefits”. (Sales & Marketing Director, case C)
Innovative practices are conducted in the belief that they will have utility in the
long-term. In our cross-case analysis, the consensus was that any current innovations will
be of long-lasting benefit to the company. As such, family firms adopt innovative
practices to achieve desirable future outcomes and accomplish the business’ long-term
goals:
“We have now developed new, top machinery that includes features from all
previous machines so we are fundamentally reducing sixteen different machines into
two. The trick is to have two machines, yet still allow people to use it many different
ways. And that was the real innovation and the real trick that the Executive Chairman
came up with”. (Sales & Marketing Manager, case E)….. “It's very advanced and
the machine runs incredibly smoothly as opposed to before. It’s going to be way
ahead of the competition for another, let's say, five years.” (General Manager, case
E)
“So anything we’ve done has been more strategically right for the brand. So as the
green tea is it’s more because we should be in green tea or social media because we
14
should try it, like there is a sector of the market that’s going to be very large in the
future and we should be part of that.” (Marketing Director, case A)
“I knew technology and innovation leadership in our industry had switched to
Europe, so I focused on licensing from German manufacturers, especially for
proprietary products like for interiors and forward lighting, and that grew into that.”
(Chairman and CEO, case 28)
Building on this reasoning and as evidenced in the cases, we suggest that futurity
is associated with innovation in multi-generational family firms. As each innovation has
an element of futurity in it, we claim that futurity is a characteristic of all innovations.
Consequently, we have clustered innovation under three further categories; each of which
included the futurity dimension; (4) futurity and continuity, (5) futurity and perseverance,
and (7) futurity, continuity and perseverance.
(4) Futurity and Continuity: Preservation Innovation
When searching for patterns in our data, we also identified innovations, which
aside from creating future value, were considered highly important for the continuity of
the family business’ reputation and traditions. These innovations were connected to the
safeguarding of the family‘s long standing mission. For instance, in firms where the
business name corresponded to the family name, such as case A and C, the family values
and reputation played a central role in new ways to promote the brand. New marketing
initiatives were associated with efforts to highlight the family traditions and values and
enhance family reputation:
“We have used our reputation, and we have a marketing project which is currently
being discussed. We are examining our brand, and looking to define what the essence
of it is and then bring that up and turn it, and tighten up marketing offering or
marketing communication. I don’t know. We might get the founders’ signature on the
box, the whole heritage side of things, you know.” (Marketing Director, case A)
“As part of this new marketing direction, the company packaging has been
redesigned to make space for a five-line narrative entitled: ‘From Our Family to
15
Yours' with the signature of the CEO featured underneath. These small touches act
as a powerful reminder of the family behind the brand.” (Sales & Marketing
Director, case C)
Innovations in this category were recognized as relating to the role of the founder,
family tradition, family values and reputation. Across all these new processes or products,
there was a consistent mention of community connectedness.
“The goal is to be seen as a sympathetic Swiss family business that is producing in
Switzerland and that is aware of its tradition. This is communicated by a new
campaign that is done by a recently hired advertising agency”… "A differentiation
of our company that is based on our basic values and on our tradition as a Swiss
family business"… "We have to be cautious with our outside appearance; we have to
avoid aggressiveness and pomposity. We prefer being small but nice, a 'pearl' in the
market. The aim is sustainable success and not short-term profit maximization."
(CEO, case 22)
“Our reputation as a family business is definitely in this area. But then, I don’t know
if people would know the family further than that. This is one of the things that our
Sales & Marketing Director is developing; a marketing strategy to
draw more
people’s attention to the family business and the community. We are hiring local
people and getting the oats from local suppliers, mostly within a hundred mile
radius”. (Financial Controller, case C)…“We believe the quintessential Irishness of
the brand comes across in the new marketing campaign.” (Sales & Marketing
Manager, case C)
The dimension of continuity encompasses the belief that there is value in projects
that are future oriented and enduring. In essence, it is associated with efforts to retain the
family mission and reputation, in addition to securing long-term relationships for the
future benefit of the family business (Lumpkin & Brigham, 2010). We include new
processes or new business relationships, which foster long term value in the family firm,
as features of this category.
“Our partnership will ensure that we will develop and provide such innovation
and leadership for the industry.” (Deputy MD, case B)
“When I visit any customer or prospect, I always emphasize that we are a family
business and we look at the market in a much more strategic, long-term, patient
way. I tell them we’re seeking true partnerships, not just revenues.” (CEO, case
27)
Interestingly, in case D, a family firm which utilised acquisitions as an avenue for
16
future growth, all the firms they acquired were family owned and/or managed. Family
business owners who decided to sell their business were more willing to sell it to them
due to their shared understanding of running a family business.
“Fundamentally, these owners wanted to sell to the brothers because they
recognized them as decent guys, a family business that would work hard and keep
our business good. So these guys, at the end of day, wanted to sell their businesses
to our company because it meant that in a way it was keeping their family business
moving along as part of the family.” (International Business Manager, case D).
Similarly, in a subsequent acquisition, this firm (case C) observed how being a
family business was a very important factor in the owners’ decision to sell.
“The Dempsey’s for example, it was a husband and wife; they came to the
Glennon’s and asked them what their motto was. The great thing that the boys are
offering is “we will keep your family business going”. We'll look after your
customers, we'll look after your people, we'll do all this, and it’s a different style.
That’s what family businesses want.” (International Business Manager, case D).
This is not an isolated feature as it has appeared across the cases. For instance, in
case 28, the firm owns several subsidiaries and has a stake in multiple joint-ventures; each
of these businesses may be thought of as key elements of the company’s network.
“It has always been with another family business.” (President, case 28).
“Potential partners ask questions like, Who is our company, Who owns them?
What industry are they in? Although we are a PLC, when acquiring firms hear
that the primary shareholder is a family and they hear about our legacy, they like
the values we possess and what we stand for.” (Tom Roche, second generation)
In sum, innovations under this category emphasized the value of preservation,
constancy, and longevity. In particular, the preservation of tradition, family values, and
reputation in the firm and the business family are of significance.
(5) Futurity and Perseverance: Patient Innovation
We distinguished the category of futurity and perseverance as innovations that
deliver future value and rewards from cumulative effort, patience, and conscientious
17
behavior. These innovations are characterized by hard work and persistence and
associated with a high level of commitment and desire to succeed. Our analysis of the
cases shows that innovations were overtly intended to persevere over time in the firm’s
long-lasting pursuit for success. These innovations demonstrated a patience, discipline,
and commitment by the firm for achieving future rewards.
“We have improved our stock system, using scanners to scan in and out pallets
and packaging of finished products. At the moment we’re actually in the process
of putting in a new warehouse management system. We will be looking at this for
the long-term as it is fairly costly acquiring new forklifts and building a stock
management system.” (Financial Controller, case C)
“Enormous time and energy has been invested in successfully implementing this
innovative service over the last eighteen months. As we all know, continuity of
raw material supply is fundamental to the growth of the sector, and we very much
hope the vessel will become a key part of our long term log supply here at Troon.”
(Co-CEO, case D)
Perseverance is associated with a willingness to make investments with lengthy
payback periods. As such, new products or processes, involving long-term investments
with benefits that can only be unlocked in the distant future, are classified under this
category.
“We have invested one point something million and it is going to be the best
forklift in the world. I think that’s the influence of being in the family business,
like he (family member) says: ‘Look it’s more fun investing in this forklift for the
long term.” (National Accounts Manager, case C)
A greater supply of patient capital means the firm is more inclined to sacrifice
short-term profits in order to pursue projects that create value in the long-term.
"We will only engage in projects that do not endanger the company as a whole.
In addition, we have a preference for projects that take some years to show
success. This gives us the possibility to get engaged in projects that are not
feasible for other firms. Sometimes we just say: let us do it." (Board Director,
case 21)
Additionally, these innovations may be especially important in times of adversity
for the firm. New initiatives in response to market challenges or industry regulations,
allows the firm to adapt and persevere where they could potentially flounder.
18
“Then we had a catastrophic collapse of the construction industry. We went
through hell. It cut through the Irish business with a knife. We had to fight to
survive week on week, trying to restructure the business, which we did thankfully,
to get ourselves focused on exports.” (Co-CEOs, case D)
“He (CEO) was able to look into the future when present times were hard: I refer,
for example, to such decisions as investment in the new plant, internationalization,
co-operative agreements. And I appreciate that he has been able to keep his
attention on human relations just like the two founders did.” (Family owner, case
16)
“The company’s “biggest bet” in this regard was made in fall 2008, when the
automobile market had cratered due to the combination of rising gas prices and
the financial market collapse. A major customer had canceled millions of dollars
in planned advertising. In this context, he (CEO) was still willing to proceed with
a major website redesign scheduled for late 2008.His rationale was that the site
redesign was important for the retention/attraction of visitors and maintaining an
edge against competitors; moreover, the layoffs that terminating the redesign
would incur would have been demoralizing for the employees, and it would have
been difficult to rehire new talent quickly, after the economy picked up.”
(Manager, case 27)
In sum, our analysis of this category identifies innovations that generate future
value from short-term effort and persistence and therefore, encourages patience in the
pursuit of future rewards.
(7) Futurity, Continuity and Perseverance: Legacy Innovation
In this category we identified innovations aimed towards adding future value and
facilitating the family business’ enduring mission and reputation, while offsetting a high
level of perseverance in the firm. We catalogued these innovations as legacy-building. .
The concept of legacy occurs when an individual’s behaviour has implications for others
in the future (Wade-Benzoni, Sondak & Galinsky, 2010). More specifically, a legacy can
be defined as “an enduring meaning attached to one’s identity and manifested in the
impact that one has on others beyond the temporal constraints of the lifespan” (Fox, Tost,
& Wade-Benzoni, 2010). In a business context, a legacy often ensures the firm is long
term viable, productive, or generates even more value for the future. By leaving a legacy,
an individual can be connected with the future (Wade-Benzoni et al., 2010); it is a
19
symbolic form of immortality (Fox et al., 2010). For instance, in case C, the family’s
efforts to strengthen the association between the brand and long-established tradition have
led to the proposed opening of a visitor centre on their premises. The suggested visitor
centre would serve as brand promotion and additionally highlight the history, legacy, and
community centric ethos of the family.
“Near the warehouse building there's another old shed with real nice stonewalls.
It hasn't been used for years so we would need a new roof and insulation and
everything. But we are thinking of making that into a visitor centre or something
like that. It will re-emphasize the brand as well as it being local, the age, the
legacy to it. We could include a little shop there as well.” (Financial Controller,
case C)
The desire to leave a legacy is a motivational driver for entrepreneurial behaviour
(Fox et al., 2010). Building a family business lasting legacy requires incumbent leaders
to take strategic decisions today that will reflected in future outcomes. The desire to leave
a legacy reflects the focus towards a long-term approach in the decision making of the
firm. In case A, the firm underwent some changes in the strategy of the company. Given
the maturity of the tea industry in Ireland, the incumbent CEO board decided to diversify
outside the tea business through a holding investment approach. While the tea business
remains the core business and the legacy of the family, the new strategy is a way to
diversify family risk and preserve their wealth in the long-term.
“So what we’ve done is we’ve diversified the family interests but not the tea
business interests. We have renewed the organizational structure and we have
created an investment company… we’re investing to truly diversify the family
business. So what we tried to do is to have two separate businesses, the tea
business and another business which is the vehicle for investing, so innovation in
terms of organizational structure.” (MD, case A)
“The new investment strategy is a question of credibility investment portfolio. We
want to keep the tea business and pass it on, in better shape, to the next
generation.” (Finance Director, case A)
Legacies are important when the results of existing actions are only realised in
future generations of the organisation. Managers often make decisions that involve long20
term consequences and therefore, affect future stakeholders of the organisation (WadeBenzoni et al., 2010). For instance, in case E, the current CEO and sole owner has focused
on creating a family group holding separated from the family firm in order to leave a
robust company structure when he soon retires.
“He (CEO and owner) has a different view to that and he has this concept called
"LINC," which is a family holding group. He has been trying to put it in place for
the last couple of years.” (Auditor, case E)
“Well, I suppose the whole family is a family business, but there is also LINC, the
holding group of the family. So my brothers are looking after two separate entities
outside the firm but they are part of the family group (LINC). We are trying to
consolidate within the firm and create more cost effective business, and a steadier
business going forward.” (General Manager, case E).
When aiming to build a long-lasting legacy, all the LTO dimensions – futurity,
continuity, and perseverance – are present. A family legacy is associated with evaluating
the long-range consequences of current actions, acquiring efforts to build a long-lasting
mission and reputation, and embedding the belief that it often takes time for things to pay
off. Therefore, innovations concerned with generating, adopting, and implementing new
ideas, processes, products, or services for legacy building, have been categorized in this
cluster.
DISCUSSION
Several observations arose from our investigation into how family firm innovation
manifests within the LTO dimensions—futurity, continuity, and perseverance—in multigenerational family firms.
First, we support the validity of Lumpkin and Brigham’s three-dimensional
construct of LTO. Previous research has called for a greater understanding of long-term
perspective and its implications (e.g., Hofstede, 1980; Miller & Friesen, 1982; James,
1999). However, since Lumpkin and Brigham’s (2011) recent work, few attempts have
been made to refine and measure the construct. In addressing this oversight, we
21
empirically examine this previously untested framework. As our novel contribution, we
provide evidence of the LTO construct and its three dimensions—futurity, continuity, and
perseverance— in the context of family firm’s innovation. Specifically, we provide a
detailed account of how these dimensions influence innovation. The leitmotif of our
theorizing is that the role of LTO is of substantial importance in understanding innovation
in family firms.
Second, we build upon the first observation and find that the tri-dimensional LTO
construct is useful in grasping how innovation can manifest differently, depending on the
context. Unsurprisingly our evidence supports the notion that innovation is synonymous
with futurity.. However, more notably, we can form a holistic view of innovation when
futurity is coupled with the different LTO dimensions. Innovation that ensures continuity
of the family’s mission and reputation and is based on family values and traditions is
categorized as preservation innovation. These innovations take into account the arc of
time i.e., they embrace the bridging of the past, present, and future. Preservation
innovations are concerned with enduring traditions that promote constancy and longevity,
and are mainly driven by a need for a long-lasting mission and reputation.
Innovations that delivers future value and rewards from cumulative effort,
patience, and conscientious behavior, are categorized as patient innovation. This
grouping identifies innovations that generate future value from the family’s combined
persistence. Patient innovations are associated with patient capital and long-term
investments, which are consistent with perseverance.
Innovations involving the three LTO dimensions—futurity, continuity, and
perseverance—are those that construct a legacy of value and reward for subsequent
generations, and, thus, are classified as legacy innovations. These innovations, created
with the underlying intention to contribute to a desired legacy, can be associated with a
22
stewardship-centric approach. Family leaders are motivated to engage in these
innovations in order to transfer a healthy, growing firm to the next generation and,
therefore, to benefit the broader interests of the family. This is consistent with stewardship
theory in that the family acts responsibly for the sake of the firm and its stakeholders
(Miller et al. 2008).
Our study makes three primary contributions. First, we advance literature on
long-term orientation by aligning its conceptual construct with empirical realities
(Colquitt & Zapata-Phelan, 2007). Our study represents the first attempt to empirically
capture Lumpkin and Brigham’s (2011) conceptual LTO framework. In particular, our
findings show that the long-term innovations adopted by family firms differ across the
three dimensions of LTO. Thus, our study contributes to research by challenging the view
of family firms as homogeneous enterprises (Chua, Chrisman, Steier, & Rau, 2012;
Kraiczy, Hack, and Kellermanns 2014).
Second, we contribute to the literature on family firm innovation by identifying
how the dimensions of LTO are associated with innovation in multi-generational family
firms. Through our focus on futurity, continuity, and perseverance, our study draws
attention to the importance of temporal dimensions of family firms (Sharma et al., 2014)
and their influence on the firms’ efforts to be innovative. We believe a key contribution
of this study has been to highlight that LTO is not only compatible with innovation, but
may also be an important enabler of innovative practices in family firms.
Third, we contribute to the family business literature, in general, by providing
further insight into such firms’ strategic behavior. We draw upon LTO dimensions as a
means to explain innovation in family firms and, therefore, shed light on their strategic
behavior. Our results contribute to a deeper understanding of innovation and LTO for the
family business literature, but also, to the ongoing conversations between
23
entrepreneurship and management scholars. Practically, our findings also have important
implications for both family firms and non-family firms’ owners in understanding firm
strategic behaviour.
LIMITATIONS AND FUTURE RESEARCH
Our research is not without limitations. Our findings are based on data collected
from successful multi-generational family firms that have taken part in the STEP project;
these firms, as per the STEP criteria, aspire to pass on the business to the next generation.
The cases were explicitly selected through theoretical sampling, driven by the phenomena
of interest and the nature of the research. We believe this was an appropriate option, as
case studies are deemed suitable for understanding and extending relationships among
constructs (Eisenhardt & Graebner, 2007). However, this method may limit the
generalizability of the findings. While we understand our interpretations and the derived
categories as analytical rather than statistical generalizations (Yin, 2009), a useful
advance to increase generalizability would be to examine our framework across a wider
spectrum of family firms outside the STEP criteria, enabling broader perceptions of how
LTO shapes innovations in family firms.
Despite these limitations, our study illuminates important avenues for future
research. One additional route could be the development of longitudinal studies that
explore how LTO changes over time. These studies could contribute further to our
understanding of LTO and its influence on the innovation of family firms, in part, by
providing insights into the impact that LTO has on the innovation of family firms at
different points in time or different generations. Studying different family firms’ criteria
and geographical contexts could enhance the generalizability of our results. To
24
complement our study, it would be interesting to investigate the non-economic
significance of LTO and its influence on innovation. Recent research suggests that
strategic decisions in family firms are often driven by non-economic goals (Gomez-Mejia
et al., 2007). LTO in family firms may be especially important in achieving noneconomic goals, due to the planning, patience, and discipline that those goals typically
require.
Another future research avenue could explore how the behavior and decisions of the
incumbent generation influences future generations. Intergenerational theorists contend
that the behavior of the incumbent generation affects subsequent generations, and have
applied this notion to family issues and broader social issues (Barry, 1989; Richards,
1981; Weiss, 1989; Portney & Weyant, 1999). The concept of intergenerational
reciprocity is that obligations to future generations stem from the fortune received from
past generations (Becker, 1986; Wade-Benzoni, 2002). As the long-term implications of
intergenerational decisions are temporally and personally removed from decision-makers,
non-family firms would potentially have different perspectives than family businesses on
how clan-like behaviors are instituted. As such, future studies may focus on the effects of
LTO on future generations and identify differences in LTO between family and nonfamily firms.
CONCLUSION
Our study illuminates the importance of one of the key constructs of temporal
research in family firms—LTO—and highlights its association to innovation. In doing so,
we expand the current understanding of LTO and its impact on family firms’ innovation.
Our aim was to bring the temporal lens to the forefront of family business studies. Gaining
an even deeper understanding of the impact of LTO on family firm innovation can provide
25
additional theoretical and practical insights to the family business literature and invite
future researchers to continue to develop this line of research.
APPENDIX A
Interview guideline of the STEP Project (only questions relevant for this study)
History and externalities:
1. Describe the historical development of your business or business group with a focus
on the family members’ roles and involvement.
2. Describe how your family “life stage” has influenced the ownership and/or
management involvement and development of the business or business group.
3. Describe the major entrepreneurial events and initiatives during your history that have
made you what you are today—think in terms of 20-, 15-, 10-, and 5-year blocks.
Entrepreneurial Orientation:
1. Do you generally take new initiatives/strategic actions and invest where the outcome
is highly uncertain, or do you prefer to invest where less resource is at stake and you
know fairly well the result (e.g., introduce new product, new service, new processes,
renewal actions, or opening new markets and launch new ventures)?
2. To what extent would you describe the organization as innovative and generating new
ideas, experimentation and creative processes that may or may not result in new
initiatives/strategic actions (e.g., introduce new product, new service, new processes,
renewal actions, or opening new markets and launch new ventures)?
3. How is it possible to maintain an entrepreneurial spirit as the business or business
group passes through generations within the owner-family?
Familiness resource categories:
Leadership
1. Describe how your family leadership (ownership and management) plays a role
in creating an advantage or constraint for your family business or group.
2. What distinct resources or capabilities do you associate with your family
leadership for generating new entrepreneurial opportunities?
Networks
1. Describe how external networks and personal connections play a role in the
development of your business and/or for generating entrepreneurial opportunities.
26
2. What role does the family’s history, reputation and goodwill play in creating and
using the networks and connections for development or generating entrepreneurial
opportunity?
3. Describe how particular family members (historically and today) play a role in
initiating, maintaining and or exploiting opportunities in the networks.
Financial capital
1. Describe how your family ownership/control enhances or constrains the allocation
of capital as it relates to growth and entrepreneurial opportunities.
2. How would you describe the risk profile of your family ownership group?
Decision-making
1. How would you describe the decision making processes in your businesses or
business group?
2. How does your family’s ownership and/or management enhance or constrain your
decision making as it relates to growth and entrepreneurial opportunities?
Culture
1. Describe your family’s core values that are foundational for your family business
or group and how they relate to growth and entrepreneurship.
2. Describe your family’s vision for continued ownership and value creation and
whether it includes entrepreneurial action.
3. Describe the culture of the group or business (i.e. beliefs, formal/informal,
relational, trust, and communication) and how the family ownership and or
management creates and or influences the culture.
4. Describe how you believe the culture of the family business or group supports or
constrains an entrepreneurial mindset and action.
Relationships
1. How would you describe the relationships between family members and the
impact on the development of your business or business group?
Governance
1. How strategic or intentional are the governance structures and business models
established in order to grow and act entrepreneurially (versus more evolutionary
as the family has changed over each generation)?
Knowledge
1. In your business, how are these specific knowledge and competencies related to
the family’s ownership and or involvement?
Entrepreneurial Performance:
1. What are the family’s goals for the future as you understand them?
2. What are the most important entrepreneurial outcomes to the ownership and
management of the business or group (i.e. traditional entrepreneurial activities:
new products, new businesses, innovations, new business models, change
activities)?
27
3. What is your view on the likelihood that your family business or group will
achieve their goals over the long run?
Long-term orientation (extra section created for this study):
1. To what extent the company considers the future when taking current decisions?
How far ahead the firm looks into the future in planning its strategies and
operations?
2. To what extent forces from the past such as legacy issues or long-term aspirations
affect future decisions (e.g., company have a strong link to the past when taking
decisions)?
3. Does the company sacrifice short-term benefits for long-term results (i.e, is the
company patient in the results)? Is there a belief in the organisation that the efforts
made today will pay off in the future?
APPENDIX B
Table 4. Schematic description of the empirical evidence.
Number
Empirical Evidence
“The most recent development from the area of new product development is in specialty teas. Specialty teas have
become the new area in the tea business. People are interested in this and it’s important for us. We have developed new
types of tea like the green tea, flavored teas or decaf tea, driven by research relating to its health benefits.” (case A)
“From a new product development perspective, you need to be creating new teas. And we also changed our packaging
of those teas. It is important how you display it on the shelf, that it is eye catching because you want to make it stand
out.” (case A)
“We are looking at a new way of communicating the brand…five years ago we started on Facebook and now we have
one hundred thousand fans. I manage that and Twitter.” (case A)
“So anything we’ve done has been more strategically right for the brand. So we went with the green tea because we
should be in green tea or social media because we should try it, if there is a sector of the market that’s going to be very
large in the future then we should be part of that.” (case A)
“The plan from now to 2019 is to have new products coming out that we can license for all of the UK and Ireland. We're
installing new rota mould plastic tank manufacturing equipment that they [the Canadian company] design and
manufacture.” (case B)
“All around Ireland what's required now is to upgrade your septic tanks. There are about 500,000 houses to be upgraded
in Ireland. Every one of them is going to need a slightly different solution. We’re coming up with different types of
products for different options and applications, and you can have one of these, and two of those, or you can have this
and this together for this application.” (case B)
“We're actually putting in a new ERP system. We are all working very hard at the moment as we’re going live in
April…. New process ERP system will decrease variable cost components in manufacturing processes, techniques,
machinery and software.” (case B)
“Actually, there's a new project going on at the moment. It is a kind of self-service porridge. Not a vending machine,
but like a coffee dispenser by which you get your porridge from a machine. We’re getting a few machines over from
the US to try it out, do some research, and meet with people in different companies to get some information and see
whether it’s a feasible idea.” (case C)
“We started doing other products and other packaging and since 2000, we multiplied our sales four or five times in that
period because we came up with different things. For example, we went into organic and convenience products.
Eighteen new products were introduced over the following 13 years.” (case C)
28
“We put in place the plan to improve, we did some research and we introduced a range of convenient new products to
address that particular niche. Then at the same time some trends, which we had been anticipating, crossed from the US
to the UK and Ireland about all the health benefits.” (case C)
“In the last number of years we have kept changing. If you went back 10 or 15 years we introduced fencing and
competitors started to follow. Once we started doing it then the others started doing it. There’s constant innovation
here.” (case D)
“In 1978, we started to build a brand new sawmill that was the latest technology at the time. It wasn’t found in Ireland
or the UK where the traditional method was a barn saw. We moved to a circular saw which served as brand new
technology and, also, introduced a new orientation system for logs. My dad and my uncle were both very forwardthinking guys and decided to go with this technology.” (case D)
“This initiative supports the firm’s approach to minimizing the impact on the environment. Logs will be delivered from
the coast and islands of Scotland to be processed in our sawmill there. Some of this finished timber will then cross the
road to our timber engineering facility to be incorporated into quality timber frame homes, resulting in an end product
with an incredibly low carbon footprint. The logs delivered by Red Princess will also enhance the business capability
to offer a one stop shop solution for sawn softwood in the British Isles.” (case D)
(1)
Futurity
(Long-term
Innovation)
“We would have a good track record over the years of being very innovative in this industry. If we go back to the late
90’s, we were the first company to adopt decking art. Go back even further we brought in pine flooring; at that point it
had to be imported from Scandinavia so we started manufacturing it from an Irish-Scotch plant. So, traditionally, the
company grew only on this site. The way they grew was through being inventive and finding new products, new niches
and developing new markets.” (case D)
“We are now in a position whereby we can develop a product that will not only take out what that other company in
Ireland is doing, but will actually take in a couple of other products ahead of it again. There is plenty of potential.” (case
E)
“My brother did his own kind of research on it and felt there was a gap in the market. I am helping him with this new
division of an online marketplace for farm machinery.” (case E)
“We have now developed new, top machinery that we call Variwrap system…. This new machinery includes features
from all previous machines so we are fundamentally reducing sixteen different machines into two. The trick is to have
one or two machines, yet still allow people to use it many different ways. And that was the real innovation and the real
trick that Liam came up with. So effectively, there are just two ranges now.” (case E)
“We are now looking at technology in terms of how to bring the farm machinery purchasing process online. It is not
necessarily online classified ads, it's for new machinery. It’s about customers being able to go online and do a process
and get the best pricing through the network. At the moment, we are looking at creating a new division within the group,
not within the company. The company was in the founding group. We’ve been working on that for about a year now.
My day-to-day role is effectively trying to get this up and running. So in terms of being entrepreneurial, I suppose this
is how you can be.” (case E)
“If you look at our profile it’s about innovation in agricultural machinery. That's where we want to position ourselves
so that people go: ‘Hey, if I buy a machine in this company I’m getting something that's kind of ahead of the rest’.
That's kind of the way we want people to perceive us.” (case E)
“We are working on an online marketplace for farm machinery. So I'm just helping him (brother) with that and just
trying to get that off the ground. My brother just did his own kind of research on it and felt there was a gap in the
market.” (case E)
“To get a new fleet of trucks was the big thing because you could get bigger bodies carrying the goods and trucks that
were less cumbersome, did more, and went faster, they could do the job in less time.” (case 2)
“New advertisements are done, the general presence is increased, mailings and direct marketing are improved, the sales
force is professionalized and all the materials as well as the webpage are modified". (case 22)
“I knew technology and innovation leadership in our industry had switched to Europe, so I focused on licensing from
German manufacturers, especially for proprietary products like for interiors and forward lighting.” (case 28)
“He established the firm’s first Japan-based office. The objective of the office is to help innovate and engineer new
products for the North American market. “The Japan office helps us get our feet on the ground to support North
American product development and address the issue of Japanese automakers wanting to build products in the US to
avoid tariffs and other challenges” (case 28)
“He managed to successfully launch a new product line called "Mousse", combining chocolate with a chocolate mousse
filling. Initially, production engineers were skeptical about the feasibility of the innovation because chocolate mousse
desserts (as opposed to simple chocolate) normally require cooling. However, the Bloch brothers managed to convince
people of their idea and the technical challenges could be overcome. Today, there are already competitors appearing,
trying to imitate this innovation.” (case 20)
“Probably one of the first discussions, which I was not a part of, was to figure out what to do. After that, think about
what we can do and where is the demand. What would give us the competitive advantage? The end result of that funnel
was that we set out to manufacture an electronic pipette, which was not the first in the world per se, but it was the first
electronic pipette in the world which was good enough to replace or even surpass the mechanic pipette.” (case 7)
29
“The firm played a major role when opening the Finnish Stone Centre by sharing the already gained knowledge of
stone, enhancing research and acting as a portal for other small businesses that want to start their business within the
stone industry. Administrative innovations, such as restructuring the firm’s management and implementing new
monitoring and control mechanisms in order to rejuvenate the business.” (case 8)
“In the US, over US$ 1 billion worth of plastic and glass is currently sent to landfill each year. Through the application
of relatively basic sorting and upgrading technology, the opportunity exists to divert significant quantities of product
away from landfill, to marketable recycled products.” (case 13).
“We have used our reputation, and we have a marketing project which is currently being discussed. We are examining
our brand, and looking to define what the essence of it is and then bring that up and change it, and tighten up marketing
offering or marketing communication. I don’t know. We might get the founder’s signature on the box, the whole heritage
side of things, you know.” (case A)
“Our reputation as a family business is definitely in this area, around County Waterford and the Munster province. But
then, I don’t know if people would know the family further than that. This is one of the things that our Sales & Marketing
Director is developing; a marketing strategy to draw more people’s attention to the family business and the community.
We are hiring local people and getting the oats from local suppliers, mostly within a hundred mile radius.” (case C)
“As part of this new marketing direction, the company packaging has been redesigned to make space for a five-line
narrative entitled: ‘From Our Family to Yours' with the signature of the CEO featured underneath. These small touches
act as a powerful reminder of the family behind the brand.” (case C)
“We believe the quintessential ‘Irishness’ of the brand comes across in the new marketing campaign.” (case C)
“He (International Business Manager) is very innovative in the manufacturing side and in generating new business
ideas. He’s great with the whole energy side of things and reusing wastes. We use the river to generate electricity and
he looks at other ways of building efficiencies, for example using nitrate electricity. He is engineering minded and very
good at that side of things.” (case C)
(4 )
“My own mission with them [partnership], predominantly, is to become the number one in the UK and Irish markets in
water treatment. There is an oversupply of manufacturing capacity in the UK market. We are going to start buying out
a few of the smaller companies over the next five years which is something I would do with them because their R&D
function is big and strong enough to sustain a conglomerated business. I only own 30% but the plan we’ve agreed from
now to 2019 is that 30% will be worth more than what my 100% is worth today.” (case B)
Futurity
&
Continuity
“He (previous CEO) would go to the Hanover Fair every year, and he would go on at least one or two trips to Canada,
the US or Sweden to seek opportunities. He cultivated relationships with the people in those countries, and he pushed
himself to do that. You know one of the things that we say about leaders is that you need to live in a tension between
being part of your community, a community of the business, and being able to stand outside your community.” (case
D)
(Preservation
Innovation)
“They (co-CEOs) don't want to make decisions just based on the short term. It's not a like a public company where we
have results, say in three months or six months, that have to hit target, or you have to make the numbers. It’s more a
case that constantly the right decision is made, and take the time frame out of it, just do it. Also, we are about long term
relationships so it's more of a long term perspective I would say.” (case D)
“Fundamentally, these owners wanted to sell to the brothers because they recognised them as decent guys, a family
business that would work hard and keep our business good. So these guys, at the end of day, wanted to sell their
businesses to our company because it meant that in a way it was keeping their family business moving along as part of
the family.” (case D)
“The Dempsey’s, for example, was a husband and wife; they came to us and asked them what their motto was. The
great thing that the boys are offering is that: “we will keep your family business going”. We'll look after your customers,
we'll look after your people, we'll do all this, and it’s a different style. That’s what family businesses want.” (case D)
“Our partnership will ensure that we will develop and provide such innovation and leadership for the industry.” (case
B)
“The familiness element is a very important part of our package...the tentacles of our company stretch across many
counties and industries but the association and recognition of the family is instant and, invariably, it is a critical
resource.” (case 13)
“We don't have the touch and feel of a big corporate... Tom travels with the management team to meet with the owners
of firms the group are merging with or acquiring, very often there is a mutual agreement on the values of the firms...Tom
has been invaluable in developing relationships with business owners, many of whom are family businesses, in North
America.” (case 13)
“Potential partners ask questions like, Who is our company, Who owns them?, What industry are they in? Although we
are a PLC, when acquiring firms hear that the primary shareholder is a family and they hear about our legacy, they like
the values we possess and what we stand for.” (case 13)
30
“When I visit any customer or prospect, I always emphasize that we are a family business and we look at the market in
a much more strategic, long-term, patient way. I tell them we’re seeking true partnerships, not just revenues”. (case 28)
“The goal is to be seen as a "sympathetic Swiss family business that is producing in Switzerland and that is aware of its
tradition". This is communicated by a new campaign that is done by a recently hired advertising agency. CFO states
that "being aggressive would not fit our company at all". He prefers "a differentiation of our company that is based on
our basic values and on our tradition as a Swiss family business". "We have to be cautious with our outside appearance;
we have to avoid aggressiveness and pomposity. We prefer being small but nice, a 'pearl' in the market. The aim is
sustainable success and not short-term profit maximization." (case 22)
“The dominant picture of the founder as the patron and founder of the company has now been translated into an umbrella
brand strategy.” (case 20)
One of the ways in which the firm builds competitive advantage is through the firm’s positioning as a family-owned
business with a people-focused culture. “When I visit any customer or prospect, I always emphasize that we are a
family business and we look at the market in a much more strategic, long-term, patient way. I tell them we’re seeking
true partnerships, not just revenues” (case 28).
“By being less aggressive than competitors about just going after business, we are able to develop longer-term
relationships. Customers like dealing with a company that treats them in this way” (case 28). The same elements have
helped the firm make strides against competitors with regard to acquisitions. In the latest acquisition there were two
additional suitors. “The owner preferred to sell to us because he knew we would take care of his employees better”
(case 28).
The firm owns several subsidiaries and has a stake in multiple JVs; each of these businesses may be thought of as key
elements of the company’s network. “It has always been with another family business.” (case 28)
“In 1969, we started dealing with a company in Dublin, Monopumps, selling borehole pumps. We were selling their
machines, their washing machines, fridges and cookers and all that…and we also started motor rewinding. That grew
small bit by bit… through the 70’s and 80’s we developed new products and new markets. For example, in 1974 we
started to produce pressure washers and that was very new at the time.” (case B)
“We were using mostly monopumps and then we started using centrifugal pumps and that changed the scene. We were
buying from different places and in 1974 he (co-founder) went to Italy. We were buying domestic pumps then from
another company in Dublin. But we said, `if they are bringing in pumps from Italy, why can't we do the same? ´” (case
B)
“One of our strategies is to grow and acquire companies in the business areas where there is more money to be made.
If you look at the mix of revenues and margins that is changing, every year it’s changing. We have a 2020 plan which
is to get somewhere between 120 and 150 million, and 5% net profit. And that's before we do any acquisitions or half
of that.” (case B)
“We have improved our stock system, using scanners to scan in and out pallets and packaging of finished products. At
the moment we’re actually in the process of putting in a new warehouse management system. We will be looking at this
for the long-term as it is fairly costly acquiring new forklifts and building a stock management system.” (case C)
“We have invested one point something million and it is going to be the best forklift in the world. I think that’s the
influence of being in the family business, like James says: ‘Look it’s more fun investing in this forklift for the long
term?’.” (case C)
(5)
Futurity
&
Perseverance
(Patient
innovation)
“We need to be looking at all the areas of growth, whether it be through export products, whether it be through adding
on new elements to the company, new pieces through exports, through making more convenient products or whether it
be through getting into cold cereals. There is potential to increase everything within the firm’s brand. And even outside
of that, whether it be through using by-product to generate energy from and stuff like that. There are capabilities within
that we have in-house at the moment; we are trying to unlock them really.”(case C)
“We are going to persevere and we're going to try and explore as many countries as we can… I think there's a lot of
room for the business to grow whether it’s in energy, new variances, new products, new markets or whether it’s by
diversifying into cold cereals.” (case C)
“Enormous time and energy has been invested in successfully implementing this innovative service over the last
eighteen months. As we all know, continuity of raw material supply is fundamental to the growth of the sector, and we
very much hope the vessel will become a key part of our long term log supply here at Troon.” (case D)
“They (co-CEOs) came to Fermoy with a plan and they came with the right attitude. They told us at the start, we are
investing in this plant, we can see the potential for growth and expansion. They spoke to every man on the floor and
told us this is where we are and outlined where they intended to go. They told us we have a future together and we want
you to be part of the team on this journey.” (case D).
“Investments here are big. There are millions spent. You can’t do that in the short-term, you will not win from the shortterm. You have to think long-term.” (case D)
“Then we had a catastrophic collapse of the construction industry. We went through hell. It cut through the Irish business
with a knife. We had to fight to survive week on week, trying to restructure the business, which we did thankfully, to
get ourselves focused on exports.” (case D)
31
“When the construction industry started to go down, then they faced a situation where they had to start exporting…the
first thing was exporting across the water to Britain.” (case D)
“Hotels are difficult businesses to take risks in, they are so capital intensive. We took a risk with one of our hotels when
we knocked it down; I had this ‘road to Damascus’ type moment when I woke up one day and thought: ‘I’ve never
actually liked to stay in that hotel because it was 3-star middling. Let’s just get rid of it and start again’. “That was a
risk involving about £5m of a new build; it could have fallen flat and gone wrong but it hasn’t done so.” (case 27).
“He (CEO) was able to look into the future when present times were hard: I refer, for example, to such decisions as
investment in the new plant, internationalisation, co-operative agreements. And I appreciate that he has been able to
keep his attention for human relations just like the two founders did.” (case 16)
“Buying the 27% of the capital last year, with a forecast for 2005, like 2004 and 2006 and 2005, means that we are
either crazy or we are working for the long-term period. And I saw it as a relevant risk that is a debt that impacts on my
father’s savings (and my mother’s, uncle’s, etc.).” (case 15)
“Profit distribution indicates prevalence for a long-term investing perspective rather than a stressing pursuit of shortterm financial return. The firm has launched a huge amount of new entrepreneurial initiatives over the last years, such
as the entry into the nautical industry, the invention of the Leonardo machine, an expansion of the firm’s activities in
Europe and US, two recent acquisitions, and a strategic joint venture.” (case 17)
“Turkey witnessed one of its most severe economic crises in 2001 and the economy contracted by about 10%. Although
the market trends and all the other indicators suggested otherwise, the company did not lay-off any employees during
this crisis. In contrast, the company continued to make investments to increase its capacity during this time period. This
move would pay off smartly as the Turkish automotive production reached an all-time high in as short as a couple of
years. In this positive environment, the company used its well-trained labour force as an advantage to attract new
projects while many competing suppliers were caught off-guard.” (case 24)
“Although the new "Mousse" line is a true innovation, it is not the result of an aggressive innovation strategy but rather
the result of the conviction that it is necessary for the long term prosperity of the firm. The CEO points out: ‘In our
industry it takes years until the customers really know a product. This is why permanent innovation is not necessary.
However, once you have managed to establish a product on the market, and the clients know it, then you have a very
faithful clientele. We have lived on such well-known products for a bit too long. We had to do something with the brand
strategy and the new products. But, indeed, we are not top innovators, but once we have something new we are very
persistent to make a success out of it." (case 20)
“You should never start a business in good times, in bad times you need to scrimp and save and think about how to
stop going broke, so you will always remember it. In the good times everything is easy but you are unprepared. When
it’s really tough you need to think.” (case 1)
“In his opinion, small investments improve the existing business systematically and the long-term projects ensure the
continuity of the business. He admits that these projects with a long-term focus involve high commitment until they
pay-off. The development of a new product line, which requires a lot of capital for R&D, PR, marketing and training
in the first two to three years, is one example in the line with other ventures such as new factories, new products and
styles.” (case 8)
“The decision to build the East Link and later the West Link toll bridges at the time was extremely high risk. They
were particularly risky projects because the economy was relatively static and the volume of vehicles on the road
didn’t justify such investment. When constructed, the breakeven point for the toll bridge was 15,000 vehicles per day
of which on average only 12,000 vehicles used the services. Therefore, the West Link was loss making during its
early years. The persistence and determination shown by the company team in relation to this project has borne
fruition, as today the East and West Link bridges boast in excess of 100,000 vehicles per day and are significant cash
cows for the firm.” (case 13)
“The company’s ‘biggest bet’ in this regard was made in fall 2008, when the automobile market had cratered (due to
the combination of rising gas prices and the financial market collapse. A major customer had cancelled millions of
dollars in planned advertising. In this context, the CEO was still willing to proceed with a major website redesign
scheduled for late 2008, despite the protests of other executives. His rationale was that the site redesign was important
for the retention/attraction of visitors and maintaining an edge against competitors; moreover, the layoffs that
terminating the redesign would incur would have been demoralizing for the employees, and it would have been
difficult to rehire new talent quickly, after the economy picked up.” (case 27)
“We have a great deal of respect for what they (joint venture company) have achieved in the past 16 years and we are
proud to be a part of this collaboration. This is an important step for our group. We believe that Chinese women are
entitled to the same fitting room concept that we are developing in the United States, England and in continental
Europe. It will take some time before this concept is firmly established, but we are convinced of its long-term
success.” (case 3)
“So what we’ve done is we’ve diversified the family interests but not the tea business interests. We have renewed the
organizational structure and we have created an investment company… we’re investing to truly diversify the family
business. So what we tried to do is to have two separate businesses, the tea business and another business which is the
vehicle for investing, so innovation in terms of organizational structure. (case A)
32
“We took the decision to diversify 15 years ago. We have a tea business, which is profitable but may not always be,
who knows what problems could arise. It is a way to diversify risk and family interests, not tea interest.” (case A)
“They make investments in non-core activities through an investment vehicle. The investment vehicle is funded by the
tea company but the tea company wouldn’t take any debt risks. And it is ring fenced in terms of any debt that might be
here which there isn’t invariably. They make cash investments and they wouldn’t come back to the tea company.” (case
A)
“So what we’ve done is we’ve diversified the family interests but not the tea business interests. We have renewed the
organizational structure and we have created an investment company… we’re investing to truly diversify the family
business. So what we tried to do is to have two separate businesses, the tea business and another business which is the
vehicle for investing, so innovation in terms of organizational structure.” (case A)
(7)
“From a family point of view there is a specific strategy which is growing wealth. In the future, this is not going to
come from the tea business; it’s going to come from the investments. So as a family that made a lot of money in tea,
now we are diversified into shipbuilding, recruitment, media, TV, radio - all unrelated businesses to the tea business.”
(case A)
Futurity,
Continuity
&
Perseverance
“The new investment strategy is a question of credibility investment portfolio. We want to keep the tea business and
pass it on, in better shape, to the next generation.” (case A)
(Legacy
Innovation)
“I want to be able to sit back and at 60 [when] I'm retired and say: ‘I enjoyed that, we took it [the family business] and
we transformed it’. I want to transform it. We have the potential to take it from 70 million to at least 500 million I think.
When I'm 60, I want to be able to look back and say: ‘we did it, we transformed it from that to that, it’s someone else’s
job now to take it on’.” (case B)
“Near the warehouse building there's another kind of old shed. It hasn't been used for years so we would need a new
roof and insulation and everything. But we are making that into a visitor centre or something like that. It could be for
visitors or even maybe for other business people that come down here to visit Kilmacthomas. We might have
somewhere to bring them. I think we are going to have over two levels and maybe with a screen downstairs to do
presentations. So, it's kind of a visitor centre/conference centre. You can maybe have a history of the plant for the
visitors.” (case C)
“Near the warehouse building there's another old shed with really nice stonewalls. It hasn't been used for years so we
would need a new roof and insulation and everything. But we are thinking of making that into a visitor centre or
something like that. It will re-emphasize the brand as well as define the locality, the age, the legacy of it. We could
include a little shop there as well.” (case C)
“Well, I suppose the whole family is a family business, but there is also LINC, the holding group of the family. So my
brothers are looking after two separate entities outside the firm but they are part of the family group (LINC). We are
trying to consolidate within the firm and create a more cost effective business, and a steadier business going forward.”
(case E).
“He (CEO and owner) has a different view to that and he has this concept called "LINC," which is a family holding
group. He has been trying to put it in place for the last couple of years.”( case E)
Another very vivid example of the firm’s emphasis on innovation in social matters is the family’s strong devotion to
arts and culture and their passion to share this devotion with those around them. The main office building also doubles
as an art gallery that houses numerous paintings and other art pieces and gives the employees of the company a chance
to experience this rich culture in as close as their work environment. In addition, the CEO proudly talks about his plans
to open an art museum and cultural center in the near future. In addition to their efforts in disseminating the love of arts,
the family has also been very active in helping people’s education. The family has built numerous schools in various
cities in Turkey. “Everything I do is for my family, my company and my country.” (case 24)
“He (CEO) was able to look into the future when present times were hard: I refer, for example, to such decisions as
investment in the new plant, internationalisation, co-operative agreements. And I appreciate that he has been able to
keep his attention on human relations just like the two founders did.” (case 16)
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Table 1. Description of the firms of Stage 1 of the study
Case
A
B
C
D
E
Primary
Industry
No. of
Employees
Turnover
(USD)
Year
Founded
No. of
Generations
Family
CEO?
Yes/no
Family
Ownership
Hot drink
beverages: tea
72
Private
1901
4
Yes
100%
Water,
wastewater
treatment
300
72 M
1968
2
Yes
100%
Food (oatbased branded
cereals)
52
22 M
1785
7
Yes
100%
Ireland
Timber:
sawmilling
260
110 M
1913
3
Yes
100%
Ireland
Agricultural
machinery
50
11M
1996
(bought by
the
family)
2
Yes
100%
Country
Ireland
Ireland
Ireland
42
Table 2. Description of the interviews of Stage 1 of the study
Firm
A
B
C
D
E
No. of
interviews
Title
Family
member
Shareholder
CEO
Yes
Yes
Chairman
Yes
Yes
Non-executive Board Member
Yes
No
Financial Director
No
No
Marketing Director
No
No
IT Director
No
No
Commercial Director
Yes
Yes
Board Member (Co-founder)
Yes
Yes
MD
Yes
No
Auditor Advisor
No
No
Large Contracts Manager
No
No
Deputy MD
Yes
No
Operations Manager
No
No
CEO
Yes
Yes
International Business Manager
Yes
No
Financial Controller
Yes
No
Sales & Marketing Director
No
No
National Accounts Manager
No
No
Co-CEO
Yes
Yes
Co-CEO
Yes
Yes
Non-executive Director/Board Member
Yes
Yes
Forestry Manager
No
No
Financial Director
No
No
Sales & Marketing Director
No
No
International Business Manager
No
No
New Business Development Officer
Yes
Yes
New Business Development Manager
Yes
Yes
General Manager
Yes
No
Sales & Marketing Manager
Yes
No
Fabrication Supervisor
No
No
External auditor
No
No
Family Advisor
No
No
Legal Family Advisor
No
Yes
Executive Chairman
Yes
Yes
6
7
5
7
9
43
Table 3. Description of the firms of Stage 2 of the study
Case
Country
Primary Industry
1
Australia
2
Australia
3
Belgium
4
Belgium
5
Belgium
6
7
Finland
Finland
8
Finland
9
10
France
France
11
France
12
Germany
13
Ireland
14
Italy
15
Italy
16
Italy
17
18
19
20
21
22
23
Italy
Switzerland
Switzerland
Switzerland
Switzerland
Switzerland
Switzerland
24
Turkey
25
26
27
Turkey
UK
USA
Diverse
Transportation &
Tourism
Lingerie
Reduction of waste
combustion biomass and
green energy
Heat Exchangers and
Process Equipment
Advertising
Biotechnology
Heat-Retaining
Fireplaces
Taxi
Furniture
Pharmaceutical for
Animals
Timber
Renewable energy;
waste management;
water; infrastructure
Renewable Energy
Food manufacturing &
retail
Pharmaceutical &
Healthcare
Moulding
Cancer healthcare
Wine production
Food (Chocolate)
Textile
Pharmaceutical
Freight
Auto-parts
Manufacturing
Education
Hotel management
Automotive information
28
USA
Manufacturer fasteners
and components for auto
No. of
Employees
Year
Founded
No. of
Generations
Family
CEO?
Yes/no
Family
ownership
600
1948
3
Yes
100
135
1921
5
1550
1919
3
Yes
Yes
100
59
310
1912
4
Yes
100
31
1921
3
Yes
100
98
370
1988
1988
2
2
Yes
No
89
50
500
1979
2
Yes
Public
2195
1200
1960
1967
2
3
Yes
Yes
100
99
2260
1968
2
No
64
110
1953
2
Yes
100
3300
1978
3
No
45
144
1906
4
No
100
97
1932
3
Yes
100
351
1932
3
Yes
100
190
600
34
175
2000
340
110
1976
1976
1944
1926
1830
1867
1900
2
3
3
3
7
5
3
Yes
Yes
Yes
Yes
Yes
Yes
yes
100
100
100
100
100
100
100
1400
1968
2
No
100
240
200
500
1980
1769
1988
1982
(bought
by the
family)
2
8
2
Yes
Yes
Yes
100
100
66.6
2
Yes
100
574
44
Figure 1. Innovation and LTO framework
Long-term
Innovation
Preservation
Innovation
1
Futurity
Patient
Innovation
4
Futurity &
Continuity
2
Continuity
7
Futurity,
Continuity &
Perseverance
6
Continuity &
Perseverance
5
Futurity &
Perseverance
3
Perseverance
Legacy
Innovation
45