Product innovation, firm renewal and family governance

Product innovation has been recognized as a primary means of corporate renewal as it demands the creation and expansion of organizational competences over time. Among the factors driving product introduction is governance structure. Where shareholders value control over the firm, new product introductions may be avoided if unrelated to the legacy product portfolio and therefore risky: As a consequence, company control goals may favour products within the existing competency domain, and that in turn may impede firm technological competency renewal. Because of their conservatism and desire for control, studying family firms new product strategies may demonstrate how governance conditions driving product selection relate to competency renewal. This study of 220 Italian firms shows family governance to inhibit the kinds of new product introductions that renew competencies, especially in successor generations. Although it does not suppress new product introduction per se, family management limits the products that renew technological capabilities, while increasing the offerings that help to open new foreign markets. (C) 2016 Elsevier Ltd. All rights reserved.