Finance and Innovation in Family Firms

Dear Colleagues,

Family firms are widespread across countries and are responsible for producing a large share of employment and value. Their presence is extensive in many industries and economies at different stages of economic development. They are able to operate in different parts of value chains and in diverse institutional contexts. This heterogeneity makes them unsuitable to be analyzed using established theories on firm growth, strategy, and decision-making, in particular in the fields of innovation and finance.

For long time, innovation and financing of innovative activities by firms have been considered as two separate and divergent fields. However, a growing literature is recognizing the relevance of studying connections between these two disciplines, and understanding what happens when they interact. In addition to this, new competitive approaches, based on company resources and intangible assets, are leading financial intermediaries to introduce new financial instruments to match investment decisions that support strategy.

Because of their peculiarities, family firms add complexity to this composite framework. Decisions in family firms are often mediated by intricate governance procedures, a fact that significantly influences the type of investment and the mode of financing. Family governance may hinder the adoption of risky investment strategies, but also help long-term financing or the adoption of equity- or debt-like financial instruments. The finance-innovation relationship in family firms comes out as a more nuanced picture than in other firms, thus setting the scene for a more in-depth study.

The aim of this Special Issue is to study innovation and finance in family firms as complementary and overlapping research areas. It aims at revising the key theories relevant to understanding the dynamics of innovation and investment in family firms, and connecting it with the financial approach they follow to back investments. It welcomes contributions on the following, though not fully inclusive, list of topics:

• Financing risky investments: the relationship between risky initiatives and uncertain cash-flows in family firms;
• Product and process innovation in family firms;
• Family firms and the financing of intangible assets;
• Managing uncertainty in family firms: investment and financing policy;
• Financing growth and innovation in family firms;
• Financing corporate entrepreneurship and corporate venturing in family firms;
• Financing strategic decisions in family firms: mergers and acquisitions, internationalization, succession and ownership restructuring.

Guest Editor name
Guest Editor

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