Skip to main content
SpringerLink
Log in

The Direct and Indirect Effects of Innovative Capability on Firm Performance: Evidence from Micro and Small Family Businesses in Ghana

  • Chapter
  • First Online:
Family Businesses in Sub-Saharan Africa

Abstract

This chapter examines how innovative capability influences performance directly and indirectly through competitive strategy in family businesses. We used data from 321 micro and small family businesses in Ghana and the bootstrap procedure suggested by Preacher and Hayes (2008: Asymptotic and resampling strategies for assessing and comparing indirect effects in multiple mediator models. Behavior Research Methods, 40, 879–891) to test our hypotheses. The findings indicate that innovative capability directly influences the performance of micro and small family businesses. However, the mediation analyses show that only the competitive strategy of differentiation mediates the relationship between innovative capability and performance. We found no relationship between cost leadership strategy and the performance of micro and small family businesses in Ghana. Implications are discussed.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 84.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Hardcover Book
USD 109.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

References

  • Acquaah, M. (2011a). Business strategy and competitive advantage in family businesses in Ghana: The role of social networking relationships. Journal of Developmental Entrepreneurship, 16(1), 103–126.

    Article  Google Scholar 

  • Acquaah, M. (2011b). Utilization and value of social networking relationships in family and nonfamily firms in an African transition economy. European Management Journal, 29(5), 347–361.

    Article  Google Scholar 

  • Acquaah, M. (2013). Management control systems, business strategy and performance: A comparative analysis of family and non-family businesses in a transition economy in sub-Saharan Africa. Journal of Family Business Strategy, 4, 131–146.

    Article  Google Scholar 

  • Acquaah, M., & Yasai-Ardekani, M. (2008). Does the implementation of a combination competitive strategy yield incremental performance benefit? A new perspective from a transition economy in sub-Saharan Africa. Journal of Business Research, 61, 346–354.

    Article  Google Scholar 

  • Acquaah, M., Amoako-Gyampah, K., & Jayaram, J. (2011). Resilience in family and nonfamily firms: An examination of the relationships between manufacturing strategy, competitive strategy and firm performance. International Journal of Production Research, 49(18), 5527–5544.

    Article  Google Scholar 

  • Allocca, M. A., & Kessler, E. H. (2006). Innovation speed in small and medium enterprises. Creativity and Innovation Management, 15(3), 270–295.

    Article  Google Scholar 

  • Alvarez, S. A., & Barney, J. B. (2001). How entrepreneurial firms can benefit from alliances with larger partners. Academy of Management Executive, 15(1), 139–148.

    Article  Google Scholar 

  • Amit, R., & Schoemaker, P. J. H. (1993). Strategic assets and organizational rent. Strategic Management Journal, 14, 33–46.

    Article  Google Scholar 

  • Anand, G., & Ward, P. T. (2004). Fit, flexibility and performance in manufacturing: Coping with dynamic environments. Production and Operations Management, 12(4), 369–285.

    Google Scholar 

  • Azubuike, V. M. U. (2013). Technological innovation capability and firm’s performance in new product development. Communications of the IIMA, 13(1), 43–56.

    Google Scholar 

  • Balan, P., & Lindsay, N. J. (2010). Innovation capability, entrepreneurial orientation and performance in Australian hotels: An empirical study. Gold Coast, Australia: Cooperative Research Centre for Sustainable Tourism.

    Google Scholar 

  • Barney, J. B. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17, 99–120.

    Article  Google Scholar 

  • Beck, L., Janssens, W., Debruyne, M., & Lommelen, T. (2011). A study of the relationship between generations, market orientation, and innovation in family firms. Family Business Review, 24, 193–196.

    Article  Google Scholar 

  • Benzing, C., & Chu, H. M. (2009). A comparison of the motivations of small business owners in Africa. Journal of Small Business and Enterprise Development, 16, 60–77.

    Article  Google Scholar 

  • Berrone, P., Cruz, C., & Gomez-Mejia, L. R. (2012). Socioemotional wealth in family firms: Theoretical dimensions, assessment approaches, and agenda for future research. Family Business Review, 25(3), 258–279.

    Article  Google Scholar 

  • Bertrand, M., & Schoar, A. (2006). The role of family in family firms. Journal of Economic Perspectives, 20(2), 73–96.

    Article  Google Scholar 

  • Birkinshaw, J., Hamel, G., & Mol, M. J. (2008). Management innovation. Academy of Management Review, 33, 825–845.

    Article  Google Scholar 

  • Bowman, C., & Ambrosini, V. (1997). Perceptions of strategic priorities, consensus, and firm performance. Journal of Management Studies, 34, 241–58.

    Article  Google Scholar 

  • Brines, S., Shepherd, D., & Woods, C. (2013). SME family business innovation: Exploring new combinations. Journal of Family Business Management, 3, 117–135.

    Article  Google Scholar 

  • Cabrera-Suárez, K., Saá-Pérez, P. D., & García-Almeida, D. (2001). The succession process from a resource- and knowledge-based view of the family firm. Family Business Review, 14(1), 37–46.

    Article  Google Scholar 

  • Campbell-Hunt, C. (2000). What have we learned about generic competitive strategy? A meta-analysis. Strategic Management Journal, 21, 127–154.

    Article  Google Scholar 

  • Carney, M. (2005). Corporate governance and competitive advantage in family-controlled firms. Entrepreneurship Theory and Practice, 29(3), 249–266.

    Article  Google Scholar 

  • Carrasco-Hernandez, A., & Jimenez-Jimenez, D. (2013). Can family firms innovate? Sharing internal knowledge from a social capital perspective. The Electronic Journal of Knowledge Management, 11(1), 30–37.

    Google Scholar 

  • Cassia, L., De Massis, A., & Pissurno, E. (2012). Strategic innovation and new product development in family firms: An empirically grounded theoretical framework. International Journal of Entrepreneurial Behavior & Research, 18, 198–232.

    Article  Google Scholar 

  • Craig, J., & Dibrell, C. (2006). The natural environment and firm performance: A comparative study. Family Business Review, 18(2), 105–122.

    Article  Google Scholar 

  • Craig, J. B. L., & Moores, K. (2006). A 10-year longitudinal investigation of strategy, systems, and environment on innovation in family firms. Family Business Review, 19(1), 1–10.

    Article  Google Scholar 

  • Damanpour, F. (1987). The adoption of technological, administrative, and ancillary innovations: Impact of organizational factors. Journal of Management, 13(4), 675–688.

    Article  Google Scholar 

  • Damanpour, F., & Evan, W. M. (1984). Organizational innovation and performance: The problem of “Organizational Lag”. Administrative Science Quarterly, 29(3), 392–409.

    Article  Google Scholar 

  • Damanpour, F., Walker, R. M., & Avellaneda, C. N. (2009). Combinative effects of innovative types and organizational performance: A longitudinal study of service organizations. Journal of Management Studies, 46, 650–675.

    Article  Google Scholar 

  • Day, G. S., & Wensley, R. (1988). Assessing advantage: A framework for diagnosing competitive superiority. Journal of Marketing, 52, 1–20.

    Article  Google Scholar 

  • De Massis, A., Frattini, F., & Lichtenthaler, F. (2013). Research on technological innovation in family firms: Present debates and future directions. Family Business Review, 26(1), 10–31.

    Article  Google Scholar 

  • Dess, G. G., & Davis, P. S. (1984). Porter’s generic strategies as determinants of strategic group membership and organizational performance. Academy of Management Journal, 27, 457–488.

    Article  Google Scholar 

  • Dougherty, D., & Hardy, C. (1996). Sustained product innovation in large mature organizations: Overcoming innovation-to-organization problems. Academy of Management Journal, 39, 1120–1154.

    Article  Google Scholar 

  • Efron, B., & Tibshirani, R. J. (1993). An introduction to the bootstrap. New York: Chapman and Hall.

    Book  Google Scholar 

  • Endah, R. L., Armanu, T., Djumilah, Z., & Imam, S. (2013). Innovation as a mediating variable of the relationship between technological capability and firm performance. International Journal of Business and Behavioral Sciences, 3(12), 41–49.

    Google Scholar 

  • Frambach, R. T., Prabhu, P., & Verhallen, T. M. M. (2003). The influence of business strategy on new product activity: The role of market orientation. International Journal of Research in Marketing, 20, 377–397.

    Article  Google Scholar 

  • Ganter, A., & Hecker, A. (2013). Deciphering antecedents of organizational innovation. Journal of Business Research, 66, 575–584.

    Article  Google Scholar 

  • Gersick, K. E., Davis, J. A., Hampton, M. M., & Lansberg, I. (1997). Generation to generation: Life cycles of the family business. Cambridge, MA: Harvard Business School Press.

    Google Scholar 

  • Gomez-Mejia, L. R., Cruz, C., Berrone, P., & De Castro, J. (2011). The bind that ties: Socioemotional wealth preservation in family firms. The Academy of Management Annals, 5(1), 653–707.

    Article  Google Scholar 

  • Gomez-Mejia, L. R., Nuñez-Nickel, M., & Gutierrez, I. (2001). The role of family ties in agency contracts. The Academy of Management Journal, 44(1), 81–95.

    Article  Google Scholar 

  • Grant, R. M. (2013). Contemporary strategy analysis (8th ed.). Chichester, U.K.: Wiley.

    Google Scholar 

  • Habbershon, T., & Williams, M. (1999). A resource-based framework for assessing the strategic advantage of family firms. Family Business Review, 12, 1–25.

    Article  Google Scholar 

  • Habbershon, T., Williams, M., & MacMillan, I. (2003). A unified systems perspective of family firm performance. Journal of Business Venturing, 18, 451–465.

    Article  Google Scholar 

  • Hayes, A. F. (2009). Beyond Baron and Kenny: Statistical mediation in the new millennium. Communication Monographs, 76(4), 408–420.

    Article  Google Scholar 

  • Helfat, C. E., Finkelstein, S., Mitchell, W., Peteraf, M., Singh, H., Teece, D., et al. (2007). Dynamic capabilities: Understanding strategic change in organizations. London: Blackwell.

    Google Scholar 

  • Hoffman, J., Hoelscher, M., & Sorenson, R. (2006). Achieving sustained competitive advantage: A family capital theory. Family Business Review, 19(2), 135–145.

    Article  Google Scholar 

  • Hurley, R. F., & Hult, G. T. (1998). Innovation, market orientation and organizational learning: An integration and empirical examination. Journal of Marketing, 62(3), 42–54.

    Article  Google Scholar 

  • Ireland, D. R., & Hoskisson, R. E. (2011). Understanding business strategy concepts plus. South Western Educational Publishing.

    Google Scholar 

  • Kellermanns, F. W., Eddleston, K. A., Sarathy, R., & Murphy, F. (2012). Innovativeness in family firms: A family influence perspective. Small Business Economics, 38, 85–101.

    Article  Google Scholar 

  • Kim, E., Nam, D., & Stimpert, J. L. (2004). Testing the applicability of Porter’s generic strategies in the digital age: A study of Korean cyber malls. Journal of Business Strategies, 21, 19–45.

    Google Scholar 

  • Kraus, S., Pohjola, M., & Koponen, A. (2012). Innovation in family firms: An empirical analysis linking organizational and managerial innovation to corporate success. Review of Managerial Science, 6(3), 265–286.

    Article  Google Scholar 

  • La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R. W. (1997). Legal determinants of external finance. The Journal of Finance, 52(3), 1131–1150.

    Article  Google Scholar 

  • Lado, A. A., Boyd, N. G., & Wright, P. (1992). A competency-based model of sustainable competitive advantage: Toward a conceptual integration. Journal of Management, 18(1), 77–91.

    Article  Google Scholar 

  • Lawson, B., & Samson, D. (2001). Developing innovation capability in organizations: A dynamic capabilities approach. International Journal of Innovation Management, 5(3), 377–400.

    Article  Google Scholar 

  • Lee, S. M., & Peterson, S. (2000). Culture, entrepreneurial orientation, and global competitiveness. Journal of World Business, 35, 401–416.

    Article  Google Scholar 

  • Leenen, S. (2005). Innovation in family businesses—A conceptual framework with case studies of industrial family firms in the German “Mittlestand”. HSG: St. Gallen.

    Google Scholar 

  • Leonard-Barton, D. (1995). Wellsprings of knowledge: Building and sustaining the sources of innovation. Boston, MA, Harvard Business School Press.

    Google Scholar 

  • Li, J. J., Zhou, K. Z., & Shao, A. (2009). Competitive position, managerial ties, and profitability of foreign firms in China: An interactive perspective. Journal of International Business Studies, 40(2), 339–352.

    Article  Google Scholar 

  • Lippman, S., & Rumelt, R. P. (1982). Uncertain imitability: An analysis of interfirm differences in efficiency under competition. Bell Journal of Economics, 13, 418–438.

    Article  Google Scholar 

  • Lubatkin, M. H., Ling, Y., & Schulze, W. S. (2007). An organizational justice-based view of self-control and agency costs in family firms. Journal of Management Studies, 44(6), 955–971.

    Article  Google Scholar 

  • Lumpkin, G. T., Brigham, K. H., & Moss, T. W. (2010). Long term orientation: Implications for the entrepreneurial orientation and performance of family businesses. Entrepreneurship and Regional Development, 22(3–4), 25–41.

    Google Scholar 

  • McAdam, R., Reid, R., & Mitchell, N. (2010). Longitudinal development on innovation implementation in family-based SMEs: The effects of critical incidents. International Journal of Entrepreneurial Behavior & Research, 16, 437–456.

    Article  Google Scholar 

  • Miller, A., & Dess, G. G. (1993). Assessing Porter’s model of generic strategies in terms of its salient research tradeoffs: Generalizability, accuracy, and simplicity. Journal of Management Studies, 30, 553–586.

    Article  Google Scholar 

  • Miller, D., & Friesen, P. H. (1986). Porter’s generic strategies and performance: An empirical examination with American data. Organization Studies, 7, 37–55.

    Article  Google Scholar 

  • Miller, D., & Le Breton-Miller, I. (2005). Managing for the long run: Lessons in competitive advantage from great family businesses. Boston, MA: Harvard Business School Press.

    Google Scholar 

  • Miller, E. J., & Rice, A. K. (1967). Systems of organization. London: Tavistock Publications.

    Google Scholar 

  • Miller, D., Lee, J., Chang, S., & Le Breton-Miller, I. (2009). Filling the institutional void: The social behavior and performance of family vs non-family technology firms in emerging markets. Journal of International Business Studies, 40(5), 802–817.

    Article  Google Scholar 

  • Mol, M. J., & Birkinshaw, J. (2009). The sources of management innovation: When firms introduce new management practices. Journal of Business Research, 62, 1269–1280.

    Article  Google Scholar 

  • Morck, R., & Yeung, B. (2003). Agency problems in large business groups. Entrepreneurship Theory & Practice, 27, 367–382.

    Article  Google Scholar 

  • Morck, R., & Yeung, B. (2004). Family control and rent-seeking society. Entrepreneurship Theory & Practice, 28, 391–410.

    Article  Google Scholar 

  • Naldi, L., Nordqvist, M., Sjoberg, K., & Wiklund, J. (2007). Entrepreneurial orientation, risk taking and performance in family firms. Family Business Review, 20(1), 33–47.

    Article  Google Scholar 

  • Neter, J., Kutner, M. H., Nachtsheim, C. J., & Wasserman, W. (1996). Applied linear regression models (3rd ed.). Chicago: Irwin.

    Google Scholar 

  • Nieto, M. J., Santamaria, L., & Fernandez, Z. (2015). Understanding the innovation behavior in family firms. Journal of Small Business Management, 53(2), 382–399.

    Article  Google Scholar 

  • OECD/Eurostat. (2005). Oslo manual—The measurement of scientific and technological activities: Proposed guidelines for collecting and interpreting technological innovation Data. Paris: OECD.

    Google Scholar 

  • Patel, P., & Fiet, J. (2011). Knowledge combination and the advantages of family firms in searching for opportunities. Entrepreneurship Theory and Practice, 35, 1179–1197.

    Article  Google Scholar 

  • Peteraf, M. A. (1993). The cornerstones of competitive advantage: A resource-based view. Strategic Management Journal, 14(3), 179–191.

    Article  Google Scholar 

  • Podsakoff, P. M., MacKenzie, S. B., Lee, J.-Y., & Podsakoff, N. P. (2003). Common method biases in behavioral research: A critical review of the literature and recommended remedies. Journal of Applied Psychology, 88, 879–903.

    Article  Google Scholar 

  • Porter, M. E. (1980). Competitive strategy. New York, NY: Free Press.

    Google Scholar 

  • Porter, M. E. (1985). The competitive advantage: Creating and sustaining superior performance. NY: Free Press.

    Google Scholar 

  • Prahalad, C. K., & Hamel, G. (1990). The core competence of the corporation, Harvard Business Review (May/June), 79–91.

    Google Scholar 

  • Preacher, K. J., & Hayes, A. F. (2008). Asymptotic and resampling strategies for assessing and comparing indirect effects in multiple mediator models. Behavior Research Methods, 40, 879–891.

    Article  Google Scholar 

  • Romijn, H., & Albaladejo, M. (2002). Determinants of innovation capability in small electronics and software firms in southeast England. Research Policy, 31, 1053–1067.

    Article  Google Scholar 

  • Rothwell, R. (1992). Industrial innovation: Critical factors for the 1990s. R&D Management, 22(3), 221–239.

    Article  Google Scholar 

  • Sanchez-Famoso, V., Maseda, A., & Iturralde, T. (2014). The role of internal social capital in organizational innovation: An empirical study of family firms. European Management Journal, 32, 950–962.

    Article  Google Scholar 

  • Schulze, W. S., & Gedajlovic, E. R. (2010). Guest editors’ introduction: Whither family Business. Journal of Management Studies, 47, 191–204.

    Article  Google Scholar 

  • Short, J. C., Payne, G. T., Brigham, K. H., Lumpkin, G. T., & Broberg, J. C. (2009). Family Firms and entrepreneurial orientation in publicly traded firms: A comparative analysis of the S&P 500. Family Business Review, 22(1), 9–24.

    Article  Google Scholar 

  • Silvestre, B. S., & Silva Neto, R. (2014). Capacity accumulation, innovation, and technology diffusion: Lessons from a base of the pyramid cluster. Technovation, 34, 270–283.

    Google Scholar 

  • Sirmon, D. G., & Hitt, M. A. (2003). Managing resources: Linking unique resources, management and wealth creation in family firms. Entrepreneurship Theory and Practice, 27, 339–358.

    Article  Google Scholar 

  • Smith, D. (2006). Exploring innovation. London: McGraw Hill Education.

    Google Scholar 

  • Spanos, Y. E., Zaralis, G., & Lioukas, S. (2004). Strategy and industry effects on profitability: Evidence from Greece. Strategic Management Journal, 25, 139–165.

    Article  Google Scholar 

  • Subramaniam, M., & Youndt, M. A. (2005). The influence of intellectual capital on the types of innovative capabilities. Academy of Management Journal, 48(3), 450–463.

    Article  Google Scholar 

  • Tokarczyk, J., Hansen, E., Green, M., & Down, J. (2007). A resource-based view and market orientation theory examination of the role of “familiness” in family business success. Family Business Review, 20(1), 17–31.

    Article  Google Scholar 

  • Tuominen, M., & Hyvönen, S. (2004). Organizational innovation capability: A driver for competitive superiority in marketing channel. International Review of Retail Distribution and Consumer Research, 14(3), 277–293.

    Article  Google Scholar 

  • Wang, C. L., & Ahmed, P. K. (2004). The development and validation of the organizational innovativeness construct using confirmatory factor analysis. European Journal of Innovation Management, 7(4), 303–313.

    Article  Google Scholar 

  • Ward, R. (1997). Growing the family business: Special challenges and best practices. Family Business Review, 10(4), 323–337.

    Article  Google Scholar 

  • Wernerfelt, B. (1984). A resource-based view of the firm. Strategic Management Journal, 5, 171–180.

    Article  Google Scholar 

  • Wu, W., Chang, M., & Chen, C. (2008). Promoting innovation through accumulation of intellectual capital, social capital, and entrepreneurial orientation. R&D Management, 38, 265–277.

    Google Scholar 

  • Yang, C. (2012). Assessing the moderating effect of innovation capability on the relationship between logistics service capability and firm performance for ocean freight forwarders. International Journal of Logistics Research and Application, 15(1), 53–69.

    Article  Google Scholar 

  • Zhao, X., Lynch, J. G., & Chen, Q. (2011). Reconsidering Baron and Kenny: Myths and truths about mediation analysis. The Journal of Consumer Research, 37(2), 197–206.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Kwame Nkrumah University of Science and Technology, Kumasi, Ghana

    Ahmed Agyapong

  2. University of North Carolina at Greensboro, Greensboro, NC, USA

    Moses Acquaah

Authors
  1. Ahmed Agyapong
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Moses Acquaah
    View author publications

    You can also search for this author in PubMed Google Scholar

Editor information

Editors and Affiliations

  1. University of North Carolina, Greensboro, Greensboro, North Carolina, USA

    Moses Acquaah

Copyright information

© 2016 The Editor(s) (if applicable) and The Author(s)

About this chapter

Cite this chapter

Agyapong, A., Acquaah, M. (2016). The Direct and Indirect Effects of Innovative Capability on Firm Performance: Evidence from Micro and Small Family Businesses in Ghana. In: Acquaah, M. (eds) Family Businesses in Sub-Saharan Africa. Palgrave Macmillan, New York. https://doi.org/10.1057/978-1-137-36143-1_7

Download citation

Publish with us

Policies and ethics

Search

Navigation