Navigating the politics of innovation in family firms: The role of political capital
Francesca Capella, Luca Manelli, Federico Frattini, Josip Kotlar, Vittorio Chiesa
kHUB post date: September 26, 2024
Originally published: 28 December 2023 (PDMA JPIM • Vol. 41, Issue 3 • May 2024)
Read time: 85 minutes
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In family firms, innovation poses distinct challenges due to the social complexity resulting from the intertwining of the family and business systems. While prior research has focused primarily on the powerful role of the dominant family coalition in leadership positions, much less attention has been paid to middle managers who must navigate the social complexity in family firms to implement management innovations. Through a multicase study of two highly innovative family firms, we theorize and demonstrate how middle managers engage in coalition building to address the social complexity in family firms when pursuing management innovation by creating a new organizational unit dedicated to managing innovation at the corporate level. Our study shows that middle managers change the social evaluation of the transfer of political capital from the dominant family coalition through enforcement and detachment. Subsequently, they convert, invest, and then mobilize different sources of political capital to gain power through pragmatic persuasion and altruistic evangelizing. Finally, we find that the dominant family coalition employs two distinct modes of political stewardship with respect to family and nonfamily middle managers.
Practitioner Points:
- Practitioners in family firms should recognize the importance of navigating political dynamics, especially the role of middle managers in leveraging political capital. Understanding and effectively managing the complex interplay between family and non-family members can be crucial for driving innovation and handling organizational change.
- It's important for practitioners, particularly middle managers, to understand how to build, convert, and mobilize different forms of political capital to gain support for innovation. This involves recognizing the unique challenges and opportunities presented by their status (family vs. non-family) and strategically utilizing their political capital to influence key stakeholders and decision-making processes.
- Practitioners, especially those in leadership positions, should aim to develop a sense of political stewardship. This involves not only direct support for innovation initiatives but also the nuanced understanding of when and how to provide this support. For family firms, this means balancing overt and covert forms of support to middle managers, depending on their familial status and the specific political dynamics of the firm.