Innovation in family firms: the Brittelstand

The Brittelstand are innovative, family-owned firms that offer national and international opportunities in the United Kingdom (UK). These fast-growing businesses are customer-oriented and proud of their family ownership and embeddedness within communities. While Brittelstand firms are as likely to deploy open innovation models as non-Brittelstand firms, their engagement with customers in regional and national markets and the ability to benefit from this collaboration contrasts with their willingness to engage in open innovation. Using longitudinal data and regression analysis on 13876 firms with 24286 observations over 2004-2020, we develop and test a theoretical framework of open innovation in the Brittelstand. Our model explains the willingness and ability of the Brittelstand firms to engage in open innovation and benefit from it. Our results show that Brittelstand firms are less willing than non-Brittelstand firms to collaborate with customers and universities, contrasting prior research on family firms, and distinguishing the innovation model of the Brittelstand from a family business model. The Brittelstand firms who are able to engage in collaboration with customers in domestic markets will outperform their non-Brittelstand counterparts in innovation outputs. In line with other studies, this study is associated with several limitations that open opportunities for further research that replicate and/or extends this study. First, this study is unbalanced panel data and the fact that some firms appear in the model only once from 2004-2020. The longitudinal study will allow to enforce causality of the relationship and examine the dynamics of open innovation in the Brittelstand. Second, the indicator on the extent and mechanisms of collaboration with customers could be better explained and measured, for example, using a scale indicator instead of a binary variable for knowledge collaboration across different types of partners and four geographical dimensions. First, Brittelstand firms who are less likely to employ open innovation models nationally and with customers. However, those Brittelstand firms who decide to collaborate with customers nationally are more likely to increase their innovation sales compared to those firms that do not engage in such collaborations? This is an interesting and unexpected finding, which means that low willingness of cross-country and cross-regional collaboration for Brittelstand firms is not optimal and engagement in collaboration with customers in domestic markets is beneficial for innovation. Managers and policymakers may use this finding to design and re-design their open innovation strategies with customers within and across regions in the UK. Second, managers may benefit from the integrated view on the two drivers of firm innovation - a collaboration with customers and the local embeddedness of such collaboration. This study describes the phenomenon of the Brittelstand and investigates the link between open knowledge sourcing across different geographical proximities and partners and innovation outputs. Firstly, we contribute to open innovation and RBV literature in family firms by theorizing and empirically testing the open innovation model for the Brittelstand firms. We also debate that the Brittelstand firms should overcome this inertia of willingness to collaborate across heterogeneous external partners and convert their regional/national embeddedness with customers into strengths for greater product innovation. Secondly, we contribute to family business literature by explaining how and why the Brittelstand firms can achieve greater innovation outputs. In doing so we draw on the concept of familiness and local embeddedness