Academic journal article Journal of Small Business Strategy

Innovativeness in Thai Family SMEs: An Exploratory Case Study

Academic journal article Journal of Small Business Strategy

Innovativeness in Thai Family SMEs: An Exploratory Case Study

Article excerpt

Introduction

At present, perhaps one of the greatest challenges in multi-generational family enterprise is the transition across generations. If a firm wants to survive as a practicable enterprise in a competitive marketplace and remain family-owned, the family must not only engage and educate succeeding generations, but also encourage innovation in their firm. Family business studies have long emphasized that next-generation members can be a vital source of innovative and entrepreneurial ideas. On the other hand, family SMEs are often characterized by a type of 'familiness' that involves introspective personalities, weighed down by old traditions, inflexible and resistant to change (Carrasco-Hernández & Jiménez-Jiménez, 2013). Familiness is incurred by the family's possession of power, experience, and the affinity between the subsistence of culture in the family and the culture within the company (Klein, Astrachan, & Smyrnois, 2005).

This research draws upon existing theoretical and empirical studies, using the case study method in the areas of family SMEs and innovation. We build a theoretical framework to propose a model for conducting research of familiness in family SMEs and its linkage toward innovativeness in the three sectors of business that the Fourth SME Promotion Master Plan 2017-2021 (Office of Small and Medium Enterprise Promotion, 2017) has been applied to support amongst Thai SMEs: manufacturing, trading and services.

This research aims to answer the question of how and why familiness enhances or decelerates innovativeness in family SMEs. This work begins by describing the concept of SMEs as family businesses and offers definitions to facilitate understanding of this research. Then, the paper explains how the concept of 'familiness' correlates to the definition of family business.

Literature Review

Family SMEs

Family business. Family businesses are those which are owned and managed by members of a family (or families), who are responsible for sustaining the business from one generation to the next generation (Chua, Chrisman, & Sharma, 1999). Employees of family businesses represent both family identities and corporate identities of their family corporation. They develop this kind of status through social interaction (Li, Xin, & Pillutla, 2002). A family entity is best defined by their experiences in their families (Golden, 2001). It can be also perceived by the status of their family's role (Yogev & Brett, 1985). The main thing that makes family business different from non-family business is the intertwining and mutual relationship between the family and business systems (Sharma, 2004). This intimate relationship might support the family business's resources, profitableness and subsistence (Milton, 2008; Sirmon & Hitt, 2003). Whereas, this aspect of the family business will support them to subsist in economic regression and occasion of inconstancy, it might challenge them in period of boom and constancy as well (Milton, 2008).

SMEs. The term "SMEs" generally refers to small to and medium-sized enterprises, but there is no unanimous definition. Definitions of SMEs are widely different in different regions, dependent on the stage of economic development as well as pervasive social conditions. For example, a business might be defined as an SME for the purpose of getting government aid in Taiwan, even though it does not meet the general criteria (Rujirawanich, Addison, & Smallman, 2011). Furthermore, many indices are used to define the meaning of SMEs, such as number of employees, amount of investment, total amount of assets, sales and production volume. The Thai Ministry of Industry classifies an enterprise as an SME when it employs less than 200 people and owns a fixed capital of lower than 200 million baht (excluding land and properties) (Rujirawanich et al., 2011).

Therefore, in this paper, we will define a family enterprise/family SME as an ownership, partnership, enterprise or any type of a business organization which has both-no greater than 200 employees and lower than 200 million baht of fixed capital, where the main power of possession is occupied by the family and the family members are self-employed in the company and/or the family's member is the CEO (Birdthistle & Fleming, 2003). …

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