Innovation Management in Small and Family-Owned Businesses

Abstract

This study addresses a gap in innovation management literature by examining how small and family-owned businesses develop and deploy strategic capabilities to support innovation under resource constraints. While prior research has predominantly focused on large, resource-intensive organizations, limited empirical insight exists into how smaller, family-controlled firms manage innovation in practice. Using a qualitative multiple-case study design, data were collected from five family-owned businesses through semi-structured interviews with owner-managers, supported by document analysis and non-participant observations. Thematic analysis revealed that entrepreneurial orientation, relational capital, and adaptive decision-making serve as key enablers of innovation, primarily through incremental process and service improvements. At the same time, financial limitations, informal governance structures, and family-driven risk aversion constrained the pursuit of radical innovation initiatives. Descriptive performance indicators indicated improvements in operational efficiency, customer retention, and cost control following innovation activities. This study contributes to theory by clarifying how strategic capabilities function as practice-based mechanisms for innovation in resource-constrained environments and extends family business research by demonstrating the dual role of family influence as both a constraint and a strategic asset. Practical implications are offered for business owners, educators, and policymakers seeking to support sustainable innovation in small and family-owned enterprises.