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Innovation and family firms do go together

The best way family-run enterprises can safeguard their assets from turning into liabilities is to institutionalise innovation.

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By institutionalising innovation through family and corporate governance and incentivising key individuals, the family-run enterprise ensures that it can expand its business without seeking external capital, and most importantly, identify and finance potential innovators from within the family.

THE words "family firms" and "innovation" seem to be at odds. Family firms smack of tight control, risk aversion, lengthy CEO tenure, existing in traditional industries and products. Some research has even gone as far as to say that family ownership harms innovation for these very reasons.

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