Business performance of family firms: exploring the roles of knowledge management, innovation and competitive advantage

Abstract

Purpose: Knowledge management and innovation play an important role in enhancing the business performance of family firms. Nonetheless, there exists a notable deficiency in research concerning the mechanisms that elucidate the relationship between knowledge management, innovation and business performance of family firms. The objective of this research is to examine the impact of knowledge management and innovation on the business performance of family firms through competitive advantage. Design/methodology/approach: The research method used in this study is a mixed method, including qualitative research and quantitative research conducted in chronological order. Specifically, qualitative research was conducted first with in-depth interview techniques to adjust the scale. Quantitative research was conducted later and was the main research. Using survey method, the research collected 197 valid samples of family firms for analysis. The partial least squares structural equation modeling (PLS-SEM) was employed to test the theoretical model. Findings: Research results show that knowledge management and innovation have positive influences on business performance of family firms. In addition, competitive advantage plays a mediating role in the effect of knowledge management and innovation on business performance of family firms. Originality/value: The literature supports the direct influence of knowledge management and innovation on business performance. However, no other study has investigated the mediating role of competitive advantage on the relationship between knowledge management, innovation and business performance of family firms. This work contributes to theoretical understanding by demonstrating that competitive advantage is a mediating mechanism that better explains the simultaneous impact of knowledge management and innovation on business performance. This work also contributes to practical knowledge by inferring that family firms should focus and invest in knowledge management and innovation to enhance their competitive advantage. Then, competitive advantages improve the business performance of family firms.