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Family business, innovation and organizational slack in Taiwan

Author

Listed:
  • Yunshi Liu

    (National Yunlin University of Science and Technology)

  • Yi-Jung Chen

    (National Kaohsiung University of Applied Sciences)

  • Linda C. Wang

    (City University of Hong Kong)

Abstract

This study examines the effect of family ownership and unabsorbed organizational slack resources on innovation in high-tech firms in Taiwan. In a sample of 278 public Taiwanese firms over a period of seven years (2002–2008) representing a total of 1946 observations, firms with higher levels of family ownership were shown to have significantly lower internal innovation in terms of R&D investment as has been shown in a number of previous studies. Yet the research also identified a key moderating factor. Unabsorbed organizational slack moderated the relationship between family ownership and innovation. Specifically, when firms had high levels of unabsorbed slack, the relationship between family ownership and R&D intensity changed to positive. In addition, the Taiwan data showed an additional moderating relationship of organizational slack; a negative relationship between family ownership and royalty payment intensity emerged for firms with low-level unabsorbed slack. Royalty payments and purchases of technology are often associated with lower innovation in firms, and Taiwan high-tech firms with additional slack did focus more on innovation through higher R&D and lower external technology royalty payments.

Suggested Citation

  • Yunshi Liu & Yi-Jung Chen & Linda C. Wang, 2017. "Family business, innovation and organizational slack in Taiwan," Asia Pacific Journal of Management, Springer, vol. 34(1), pages 193-213, March.
    • Handle: RePEc:kap:asiapa:v:34:y:2017:i:1:d:10.1007_s10490-016-9496-6
    DOI: 10.1007/s10490-016-9496-6
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