Family Firms and Investment Innovation

Abstract

This study, with the aim of improving the performance of small and medium-sized companies, expresses the impact of the decision-making of managers and entrepreneurs of these companies in the direction of investment innovation in today’s business conditions with wide variables and technological growth. This paper focuses on the phenomenon of innovation within family businesses, seeking to identify and analyse its role in enhancing family-owned firms. The research investigates the influence of family ownership, family management involvement, internationalization strategies, and company size on innovation within the context of family-owned manufacturing companies listed on the Indonesia Stock Exchange. Data spanning is the 2019-2021 period, collected from annual reports and announcements of these manufacturing firms, reveals that family ownership and firm size correlate with investment in innovation. However, the recruitment of family management and the implementation of family-owned business internationalization strategies appear to exert limited influence on innovation activities. Considering the importance of family companies in economic and technical progress and the complexities and changing conditions governing their business environment, this research main contribution is to show how managers and entrepreneurs make decisions in investment innovation according to the conditions of governing in family small and medium companies.