Innovation in small and micro family firms: disadvantages and opportunities

Purpose This paper aims to explore the innovation in small and micro family firms, in comparison to that of small and micro nonfamily firms, and the organizational characteristics that could enhance innovation in these firms. Design/methodology/approach We collected survey data from 215 small and micro business owner-managers in the United States and tested our hypotheses using ordinary least squares regressions. Findings We find that small family firms are less innovative than small nonfamily firms. However, our results suggest that small family firms can still enhance their innovation by cultivating a more collaborative organizational culture where bottom-level and non-family employees can participate in business decisions. Further, we find that while having an organic organizational design helps small firms be more innovative, the positive effect of organic design on small family firms’ innovation is not as strong as its effect on small nonfamily firms’ innovation. Originality/value This paper offers a unique and nuanced examination of innovation in family firms by narrowing down the scope to small and micro firms. Moreover, the paper investigated the drivers of innovation in small businesses and how these drivers enhance/decrease innovation in small family firms. Our findings suggest that the paths for more innovation are different for small family and nonfamily firms.