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Innovation in family firms: ownership, management and organisational decision-making
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Date
2026-06-19
Authors
Lenihan, Niamh
Journal Title
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Publisher
University College Cork
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Abstract
This thesis explores how family firm ownership, management structures and organisational conditions shape innovation behaviour and outcomes. By integrating insights from agency theory and its behavioural extensions, it demonstrates that innovation in family firms is a strategic process shaped by managerial agency and preferences, as well as ability and willingness constraints. This research addresses three overarching research questions: (1) Do family-owned firms managed by nonfamily managers adopt more mental health and well-being practices than family-managed firms? (2) How do managerial ability and willingness within family firms shape the adoption of new technologies? (3) How do family ownership and management structures influence innovation success in micro-firms?
This thesis first explores workplace health promotion, a topic that has received little attention in the family business literature. To address this gap, this thesis uses new firm-level survey data and employs propensity score matching to examine how family firms adopt mental health and well-being practices. The findings show that, among family-owned firms, nonfamily-managed firms adopt more mental health and well-being practices than family-managed firms do. In particular, nonfamily-managed firms are more likely to introduce prevention-focused practices. By drawing on agency theory and linking the adoption of these practices to managerial type, this research demonstrates that the adoption of mental health and well-being practices is a strategic innovation decision shaped by managerial structure, rather than a peripheral corporate social responsibility activity.
While technological innovation is widely acknowledged to enhance firm performance and competitive advantage, few studies examine such innovation within family firms. This thesis extends the ability-willingness paradox to technology adoption in small family firms. Using Microbusiness survey data, it measures ability by management type, while willingness is captured through proxies such as growth ambition, collaboration, and external finance. This study employs Probit estimates to show that family-managed firms are less likely to adopt technologies, whereas family firms exhibiting greater willingness are more likely to do so. Crucially, findings show that willingness positively moderates managers' adoption behaviour – family managers with greater willingness are more likely to adopt technologies in small family firms than those with lower willingness. This contributes to agency-based perspectives on family firms by showing that behavioural orientations shape the ways in which managerial structures influence technology adoption.
Finally, this thesis examines innovation success in micro-firms by distinguishing firms by ownership (family-owned vs nonfamily-owned) and management (family-managed vs nonfamily-managed), measuring innovation success through sales generated from new innovations. Using an innovation production function approach, the Tobit estimations provide evidence that family-owned, family-managed firms achieve less innovation success than nonfamily firms. In contrast, family-owned, nonfamily-managed firms achieve innovation success levels comparable to those of nonfamily firms. However, outcome equivalence does not imply mechanism equivalence, as moderation analysis shows that nonfamily managers do not gain the same incremental benefits from internal R&D.
Overall, this thesis contributes to the family business literature by advancing the understanding of family firms as shaped not simply by family ownership but by the interaction among ownership, management structures, and organisational conditions. By highlighting the heterogeneity of family firms, the findings show that managerial ability and willingness are central to understanding strategic decision-making and innovation success, particularly within the underexplored micro-firm context. Consequently, family-managed and nonfamily-managed firms cannot be treated as homogeneous groups, as family firms differ in their strategic and resource conditions. This has important practical and policy implications, highlighting the need for more targeted support and management strategies that reflect the diverse innovation needs and capacities of family firms.
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Keywords
Family firms , Family management , Nonfamily management , Innovation , Workplace health promotion , Technology adoption , Agency theory , Behavioural agency theory , Ability and willingness paradox
Citation
Lenihan, N. 2026. Innovation in family firms: ownership, management and organisational decision-making. PhD Thesis, University College Cork.