Relationships and Innovation of Family and Non-Family Firms: Evidence from an Italian Life Science Cluster

This paper aims to investigate how different typologies of relationships affect firm’s innovation performance. Within the broader research area of innovation, existing literature emphasizes the role of social capital in order to acquire knowledge and hence develop innovative output. However, much research is needed to disentangle the effect of different types of social capital. Distinguishing between different degrees of proximity in relationships (e.g. local vs distant) is important especially in industries where phenomena of firms’ spatial agglomerations (i.e. clusters) are crucial to innovation. In line with recent trends in the innovation debate, we consider the case of family vs. non-family firms. Family firms are a particularly interesting player within an innovation cluster because of their distinctive behavior with respect to innovation, and their unique resource endowment and exploitation processes. Findings from a survey conducted on 145 firms belonging to Tuscan regional Life Science cluster show that i) the number of local relationships is curvilinear (inverted U-shape) related to R&D effectiveness, ii) the number of distant relationships is positively related to R&D effectiveness, iii) family involvement negatively moderates the relationship between relationships and R&D effectiveness. Post-hoc analysis reveal a three-way interaction between number of local relationship, number of distant relationship and family involvement suggesting that family firms are particularly able to take advantage of the combination of local and distant relationships so to produce innovation outcomes. The paper contributes to the debate of innovation and entrepreneurship in family firms. Policy implications are also offered.