Innovation Capabilities and Financing Constraints of Family Firms
41 Pages Posted: 22 Dec 2015
Date Written: December 2015
Abstract
Using the 2007 Mannheim innovation survey, we investigate whether family firms are more financially constrained than other firms and how this affects both innovation input as well as innovation outcomes such as market and firm novelties or process innovations. Based on the CDM framework, estimation of the recursive system of equations shows that family businesses are more likely to be constrained and have, on average, lower innovation input. Surprisingly, however, this does not reduce their innovation outcomes as, on average, family firms have the same level of innovation outcomes as non-family firms.
Keywords: Innovation, Capability, Financing Constraints, Family Firms, CDM
JEL Classification: G32, O32
Suggested Citation: Suggested Citation