Effects of organisational culture on organisational innovation performance in family firms

The purpose of this paper is to examine the effects of organisational culture (OC) on organisational innovation performance (OIP) in family small and medium-sized enterprises (SMEs). It seeks to establish the type of culture that lead to high innovation performance in family firms.

A postal survey of family SMEs across sectors in the UK is conducted. The study employs multiple regression analyses to test which family business culture has an effect on OIP. Among the family business cultures tested are: an external cultural orientation, a flexible and open OC as well as an organisational climate based on open communication and trust, the founder culture, and a long-term cultural orientation.

The findings show that a paternalistic and founder culture type do not have a positive effect on family firm innovation performance, but an entrepreneurial-like culture does, i.e. one that is externally oriented, flexible, proactive (refer to an open culture) and long-term oriented. Similarly, an inward focus culture such as, the founder culture impedes innovation; while an outward focus culture such as, an external orientation culture has a positive effect on family firm innovation performance.

This study makes valuable contributions to the understanding of theory and practices of innovation in family businesses. It provides future research directions.