Economic and Technological Importance of Innovations in Large Family and Founder Firms: An Analysis of Patent Data

Abstract

Prior research has analyzed R&D spending in family and founder firms. Yet, little is known about the economic and technological importance of innovations in these types of firms. Using patent citation data, we show that founder-managed firms, which we argue favor an entrepre-neurial orientation, receive more patent citations when compared to other firms, even controlling for R&D spending. By contrast family-managed firms, many of which, we argue, pursue socio-emotional wealth for the family, receive fewer patent citations compared to other firms, again, controlling for R&D spending. Patent citations have been shown in the literature to reflect the economic and technological importance of innovations.

Keywords: Innovation, family firms, founder firms, patents, patent citations

JEL Classification: G32, M13, O31