Investigating the role of family ownership and co-operative ownership advantages in managing innovation and entrepreneurship: a family firm perspective

Abstract

Family firms and co-operative businesses are two different ownership structures that have different effects on managing innovation and entrepreneurship. Interestingly, membership of co-operatives is often comprised of small firms including family firms. Despite the predominance of family firms and co-operatives, the interaction between these ownership structures had been largely overlooked in academia, making our understanding about how they work together to manage innovation and entrepreneurship abstruse. This study aims to develop the understanding of the ownership advantages of family firms and co-operatives in managing innovation and entrepreneurship. This study adopts a qualitative multiple-case study approach to theoretically test 8 propositions derived from literature on family firm ownership and its management of innovation and entrepreneurship, and co-operative ownership and its management of innovation and entrepreneurship. Three family firms that are members of the same co-operative were selected as cases, a total number of 8 semi-structured interviews with family members involved in the business were conducted, and thematic analysis of interview data was used to revise and develop new propositions that can be used to guide further research. This empirical study fills the gap by synthesizing existing knowledge about the ownership advantages of family firms and co-operatives regarding the management of innovation and entrepreneurship. This study finds that family firm and co-operative ownership advantages can be mutually complementary to managing innovation and entrepreneurship. First, co-operatives can provide a network to facilitate opportunity recognition, and family businesses can use co-operative as social networks to identify more entrepreneurial opportunities. Second, co-operatives provide a resource coordination function for its family firm members, which frees up resources that family firms can re-direct towards innovation and growth. Third, the collective power of co-operatives can be used to develop ventures for family firm members, and family firm as members can advance the venture development through the co-operative. Lastly, co-operatives can not only promote the economic value of family firms, but also help family firm members preserve their socioemotional wealth, and family firm as members can contribute to social capital growth and value creation of co-operatives.