Family businesses are fast becoming a powerhouse to be reckoned with, according to Bond University Associate Professor of Entrepreneurship and Family Business, Dr Justin Craig.
Dr Craig argues that in the past, family businesses have struggled to compete with large corporations, but the increasing accessibility of information technology has levelled the playing field, making the smaller business players more competitive.
Together with Bond University Research Fellow Clay Dibrell and Professor Peter Davis from the University of North Carolina, Dr Craig examined the link between information technology and innovation in a research paper entitled ‘Fueling Innovation through Information Technology in SMEs’.
“We found that since family businesses have been able to afford, embrace and understand technology, they have realised many flow-on effects that have allowed them to be more competitive,” he said.
“Large corporations have long underestimated family businesses, but now that the playing field is levelling, they should be wary of underrating the ‘little guys’.
“Many family businesses are quickly evolving to be the thorns in the side of much larger companies,” Dr Craig said.
Dr Craig said his team’s research paper, published in the Journal of Small Business Management 2008, 46(2), showed a direct link between information technology and innovation.
“Once, it was only big corporations that had the resources to access and develop technology, and benefit from the innovative advancements that went hand in hand with that.
“Now that technology has become far more accessible, family businesses are discovering that IT is a rich recipe for competitive advantage, and are becoming far more aware of its value.
“Our research has shown that while investing in technology is expensive and doesn’t necessarily pay immediate returns, it is essential to fuel innovation, which in turn enhances firm performance and keeps the business competitive.
“We set out to prove that it is important that technology is not perceived as a cost, but rather as a benefit,” he said.
“While the advantages may not be immediately apparent, once a family business gets on board with technology, the flow-on effects are many.
“It facilitates both product and process innovation, allowing for constant re-invention.
“Couple this with the intrinsic benefits of being a small to medium enterprise, that is a quicker decision making process and greater strategic flexibility, then you have a family business with a distinct advantage over its much larger competitors when it comes to responding to change,” Dr Craig said.
Dr Craig added that it is not just industry that is becoming aware that the proper use of information technology is associated with innovation.
“Universities are also now acknowledging that Business and IT go hand in hand, and are updating their programs and Faculty structures to reflect this,” he said.
“This understanding is certainly reflected at Bond University, where we have seen the joining of the two disciplines. No longer do Business and IT sit in two separate silos – they are now closely related.”
Dr Justin Craig is the Co-Director of the Australian Centre for Family Business at Bond University.