Innovation and growth in family-owned Mexican SMEs.

Abstract

This paper studies the relationship between innovation and the level of growth in family-owned small and medium-sized enterprises (SMEs), this is done within the context of Mexico. The conceptual framework of analysis is based on the hypothesis that innovation in products, processes and management systems contribute to the achievement of growth in family-owned SMEs. To test this hypothesis, a model of structural equation of second order was developed with data collected from 206 family-owned SMEs located in the state of Aguascalientes, Mexico. The empirical evidence provided by the analysis supports the hypothesis, showing that family-owned SMEs that increase their innovation activities will also significantly increase their opportunities for growth. This finding can be used to inform the business growth strategies formulated by the owners, or managers, of family-owned SEMs. These also indicate policy-makers that by designing effective policies and providing incentives to support innovation in family-owned SMEs, the government would not only contribute to the growth of these organisations but also to the growth of their regions and countries. Despite the importance of innovation and family-owned SMEs, evidence suggests that studies focused on investigating innovation in this type of organisations are very limited. This paper fills this gap by providing a refined understanding of the relationship between innovation and growth in family-owned SMEs.