HRM and Innovative Capabilities of Family Businesses

Abstract

Drawing upon the resource-based view and agency theory, this study examines the effects of human resource management and the innovative capabilities of nonfamily members on the performance of family businesses. The results show that training and innovative capabilities influence performance, while strategic planning strengthens the relationship between human resource policies and performance. Moreover, family businesses with weak governance practices can initially benefit from innovation, but they must enhance their governance to sustain growth in performance. Family businesses should focus on the selection and training of nonfamily members to increase their innovative capabilities and enhance their performance.