Family Owned Business Institute

Research Scholar's Abstracts 2010 - Richard L. Gottschall, Alexandra Dawson, Pramodita Sharma

Human Capital Impacts on Innovation in Entrepreneurial Family Firms

Richard L. Gottschall, Alexandra Dawson, and Pramodita Sharma
2010

This research examines the relationship between human capital and innovation in entrepreneurial family firms and seeks to better understand why some family firms are more innovative than others. The underlying premise of this research is that entrepreneurial family firms seek wealth generation through a human capital driven innovation process. Drawing from the strategic entrepreneurship and human capital literatures (e.g., Becker, 1962; Ireland, Hitt, & Sirmon, 2003), we propose that variations in the nature and extent of investment in the human capital of family members will contribute to variations in the innovative outcomes of family firms. More specifically, we suggest that family firms that invest in the development of the firm specific human capital of family members are more likely to engage in incremental innovation. In contrast, investments in the development of the general human capital of family members will lead to radical innovations.