Longitudinal development of innovation implementation in family‐based SMEs : The effects of critical incidents

Purpose – There is a paucity of studies on the complex longitudinal dynamics of innovation incorporation within family‐based small‐ to medium‐sized enterprises (SMEs) in response to market and technological change. Attempts at innovation implementation are likely to be influenced by the dynamic effects of critical incidents or crisis points in small family‐based firms. The aim of this EU‐funded study is to explore the effects of critical incidents on innovation implementation within a regional cluster of family‐based SMEs over a two‐year period. Design/methodology/approach – The research methodology involves the longitudinal study of a regional cluster of five family‐based businesses in relation to innovation implementation at firm level. A participant observation and critical action learning methodology was used to study the firms over the two‐year period of the study. Findings – The findings, as summarised using a conceptual model, show that the critical incidents acted interactively with the firm's lifecycle stage and its approach to family versus business, to either act as a catalyst for developing more radical innovation or in maintaining the status quo or continuous improvement. Practical implications – The findings can act as a guide for how family‐based firms can evaluate and maximise their responses to critical incidents and leverage them to encourage more radical approaches to innovation implementation. Originality/value – There is a paucity of longitudinal studies on the effect of critical incidents on approaches to innovation implementation in family businesses.