Corporate entrepreneurship in family firms: a family perspective.

Entrepreneurship has been recognized as an important factor contributing to firm success. Despite the potential benefit of corporate entrepreneurship to sustain the family firm across generations, corporate entrepreneurship has been underresearched in the family firm literature. We investigate how generational involvement, willingness to change, and the ability to recognize technological opportunities impact corporate entrepreneurship in family firms. We also examine strategic planning in family firms as a facilitating process. Our findings suggest that willingness to change and technological opportunity recognition are positively related to corporate entrepreneurship in family firms. We further found strategic planning to significantly moderate the relationships between (1) generational involvement and (2) technological opportunity recognition and corporate entrepreneurship. These findings and implications for management and research are discussed.

Introduction

Corporate entrepreneurship is critical to family firm survival, profitability, and growth (Rogoff & Heck, 2003; Salvato, 2004). Corporate entrepreneurship refers to the entrepreneurial activities within organizations that are designed to revitalize the company's business by changing its competitive profile or by emphasizing innovation (Zahra, 1995, 1996). Examples of corporate entrepreneurship include product innovation, process innovation through research and development, and the pursuit of new markets (Covin & Selvin, 1991; Miller, 1983; Zahra, Neubaum, & Huse, 2000). These entrepreneurial activities promote the continuity and success of the family firm by contributing to growth in employment and wealth (Upton, Teal, & Felan, 2001). Indeed, research has shown that corporate entrepreneurship increases revenue streams, empowers employees, and improves profitability (Barrett & Weinstein, 1998; Lumpkin & Dess, 1996; Zahra, 1996). With the competitive landscape of the twenty-first century becoming increasingly dynamic and uncertain (Hamel, 2000), it is of the utmost importance that family firms develop an entrepreneurial mindset that allows them to identify and exploit opportunities in their environments (Sirmon & Hitt, 2003).

Despite the importance of corporate entrepreneurship to the success and survival of family firms across generations, few studies have examined how families influence their firms' entrepreneurial activities (e.g., Nordqvist, 2005; Rogoff & Heck, 2003; Salvato, 2004). Furthermore, little is known regarding why some family firms are more successful at corporate entrepreneurship than others (Nordqvist, 2005). While some research portrays family firms as reluctant to invest in new ventures (Cabrera-Suarez, Saa-Perez, & Almeida, 2001), assume risk (Morris, 1998), or induce change (Levinson, 1987), other research suggests that family firms that invest in entrepreneurship have greater potential for high performance (McCann, Leon-Guerrero, & Haley, 2001). Therefore, in response to a call for research that studies the influence of the family on corporate entrepreneurship (Aldrich & Cliff, 2003; Chrisman, Chua, & Steier, 2003; Nordqvist, 2005), this study examines why some families are better at fostering corporate entrepreneurship in their firms than others.

In line with Salvato's (2004) research on entrepreneurship in family firms, Miller's (1983) view of entrepreneurship was used to frame our study. Miller defines entrepreneurship as "a multidimensional concept encompassing the firm's actions relating to product-market and technological innovation, risk taking and proactiveness" (p. 771). This view of entrepreneurship is widely accepted in the field (Salvato, 2004; Zahra, 1996), and therefore was considered in developing our research model.

More specifically, because technological innovation drives entrepreneurship (Shane, 1993), we examined how the technological opportunities perceived to be present in a family firm's environment influence corporate entrepreneurship. The importance of anticipating, embracing, and inducing change to entrepreneurial thinking (Miller, 1983) is reflected in our consideration of family members' willingness to change. In addition, because Miller argues that researchers need to distinguish different types of firms when examining entrepreneurial activities, the generational involvement of the family firm was included. Indeed, Salvato's (2004) research suggests that the generational involvement of the family firm influences entrepreneurial activities. Lastly, because strategic planning is expected to play an important role in a family firm's endeavors (Salvato, 2004), we investigate strategic planning as a facilitating process in family firms, i.e., a moderator. We conceptualize strategic planning as an integrative effort (Ketokivi & Castaner, 2004) that may help to align family members with organizational priorities, thus enhancing the effects of technological opportunities, willingness to change, and generational involvement on corporate entrepreneurship.

Our article contributes to the literature in at least three ways. First, we add to the corporate entrepreneurship literature by investigating how variables associated with innovation as well as variables common to the family firm realm affect corporate entrepreneurship in family firms. While studies investigating the antecedents of corporate entrepreneurship in nonfamily firms are common (e.g., Covin & Selvin, 1991; Lumpkin & Dess, 1996; Zahra et al., 2000) and some initial research has been conducted in midsize organizations (e.g., Wiklund & Shepherd, 2003b; Zahra et al., 2000), to our knowledge, this is one of the first empirical studies to examine corporate entrepreneurship in family firms (for another exploratory study see Salvato, 2004). Second, we show the culture of the family firm in regard to perceiving technological opportunities and willingness to change matters to corporate entrepreneurship. This underscores the importance of the family in understanding family firm entrepreneurship and success. Third, we add to the literature on strategic planning by considering strategic planning as a moderator that helps encourage corporate entrepreneurship. While strategic planning has not always been directly linked to organizational performance (for a review see Miller & Cardinal, 1994), we clearly show that strategic planning can indirectly enhance corporate entrepreneurship in family firms.

Our article will be structured as follows: After a brief literature review on corporate entrepreneurship, we will develop our hypotheses and outline the methods employed in this study. Then, we will report and discuss our results, outline the implications of our study and conclude with limitations and avenues for future research.

Literature Review and Theoretical Development

Corporate entrepreneurship has been recognized as an important factor that contributes to firm success (Zahra, 1996; Zahra, Hayton, & Salvato, 2004). Corporate entrepreneurship involves a variety of potential tasks including product innovation, risk taking, and proactiveness that are aimed to facilitate organizational renewal and sustainability (Covin & Selvin, 1991; Miller, 1983). As such, corporate entrepreneurship is seen as an important element in the survival of family firms because it helps create jobs and wealth for family members.

However, the decision to invest in corporate entrepreneurship is not always simple for family firms. Family control imposes capital constraints that can inhibit family firms from funding entrepreneurial activities (Carney, 2005). For example, the risks and changes involved in pursuing entrepreneurial activities may limit a family firm's investment in corporate entrepreneurship due to their concern for wealth preservation (Carney, 2005; Chrisman, Chua, & Steier, 2005). In addition, the decision to invest in corporate entrepreneurship is unique in family firms because family interests and values are an integral part of the goals and strategies of a family business (Sharma, Chrisman, & Chua, 1997). While some family firms appear to have a culture that supports innovation (Upton et al., 2001) and change (Vago, 2004; Zahra et al., 2004), other family firms may have little corporate entrepreneurship because the family may have a desire to maintain the status quo (Gersick, Davis, Hampton, & Lansberg, 1997; Kepner, 1991) or they may not perceive opportunities in their environments (Salvato, 2004). As such, in examining corporate entrepreneurship in family firms, a family perspective that considers family members' attitudes and values is necessary.

Accordingly, our model, presented in Figure 1, reflects the attitudes and values that are expected to contribute to corporate entrepreneurship as suggested by Miller's (1983) work on entrepreneurship that stresses the importance of technological innovation and change as well as the need to consider firm types. Specifically, we propose that perceived technological opportunities, willingness to change, and generational involvement influence family firm corporate entrepreneurship. We also investigate strategic planning as an integrative effort (Ketokivi & Castaner, 2004) that facilitates corporate entrepreneurship in family firms by aiding in the sense making of the families' priorities (Weick, 1995) and the exploitation of strategic initiatives. As such, our model is in line with research that portrays the ability to recognize opportunities, the willingness to pursue opportunities, and the strategic planning to exploit opportunities as key factors that support corporate entrepreneurship (e.g., Covin & Miles, 1999; Venkataraman, 1997; West & Farr, 1989). Each of our hypotheses is further developed later.