What is it about?
We study (1) the direct effects of family ownership on innovation and (2) the influences of business group affiliation on these family firms.
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Why is it important?
Theoretically, we complement agency theory by incorporating both the institutional perspective and the external resourcing perspective to provide a more robust framework for examining the impact of family ownership on innovation in emerging markets. Methodologically, we adopted a more rigorous econometrics method by providing a panel analysis that used a system GMM estimator and addressed the endogeneity issue thoroughly, which represented a significant improvement over the shortcomings of the methodologies found in the existing literature.
Perspectives
Our findings suggest that the Indian government should provide support for affiliating family firms with business groups while improving policies on information disclosures; it should also establish a proper corporate governance mechanism for private and public family business. The findings further suggest that a corporate governance code should encourage family firms to have an independent professional CEO.
Dr Suman Lodh
Middlesex University
Read the Original
This page is a summary of: Innovation and Family Ownership: Empirical Evidence from India, Corporate Governance An International Review, June 2013, Wiley,
DOI: 10.1111/corg.12034.
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