Managing the tensions between tradition and innovation in family firms

Abstract

Purpose

This study explores the relationship between innovation and tradition in family firms. By examining how these firms manage the potential tension between these two elements, the study aims to understand better how innovation and tradition coexist and support long-term survival across generations.

Design/methodology/approach

This study has a constructivist standpoint and follows a qualitative methodology. By conducting a comparative case study, the data are collected from semi-structured interviews with 10 participants in 4 case companies located in Sweden. The data are analysed using thematic analysis.

Findings

This study found that managing the tension between innovation and tradition is carried out through four mechanisms: forward thinking through heritage, paradoxical thinking, operational control and governance. Moreover, the study further shows the great importance of the concept of intergenerational learning in family firms in managing tension.

Originality/value

The findings from this study contribute to the existing literature in family firms concerning managing tradition and innovation by providing a novel conceptualisation of the mechanisms embedded in this process. Moreover, the article proposes a grounded model, which could be used in research and practice when dealing with similar issues.

Citation

Gil, M., Thor, K. and Gemheden, A. (2024), "Managing the tensions between tradition and innovation in family firms", Journal of Family Business Management, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JFBM-09-2024-0213

1. Introduction

Family firms are deeply rooted in tradition, which plays a crucial role in preserving long-term values and sustaining the business across generations (Deb et al., 2022; Distelberg and Blow, 2010); they face the challenge of balancing this with innovation, which is essential for long-term survival in a competitive global environment (Erdogan et al., 2019; Santos et al., 2023). The coexistence of tradition and innovation is debated, but evidence suggests that family firms can successfully integrate both, as many of Europe's most innovative firms are family-owned (Duran et al., 2016; Elo and Dana, 2019; Ratten and Tajeddini, 2017). Sweden's strong tradition of entrepreneurship underscores how family firms adapt to technological changes while maintaining their historical roots, making them key players in modern industrial development.

Research on family firms has revealed that they often face paradoxical tensions between tradition and innovation (Leppäaho and Ritala, 2022). Previous studies on the paradox perspective in family firm change have explored the tensions between risk-averse and risk-preferring logics. For instance, Farjoun (2010) highlights the importance of understanding the temporal dynamics of stability and change. Additionally, research by Oinonen et al. (2018) suggests using temporal, spatial, and accommodation-based strategies to manage paradoxes, with Andriopoulos and Lewis (2008) recommending ambidextrous organising. However, family firms leverage tradition as a source of long-term commitment, intergenerational learning, and deep-rooted values that provide stability and continuity (Zellweger et al., 2012). At the same time, to remain competitive, many family businesses are also explorative, continuously innovating to develop new products and services that challenge the status quo (Magistretti et al., 2020). To balance these opposing forces, some firms use governance structures, such as family councils and advisory boards, to reduce conflicts and ensure organisational efforts are aligned (De Massis et al., 2015). Additionally, many family firms establish dedicated innovation departments that focus on developing new ideas while keeping tradition at the core of strategic decision-making (Gomez-Mejia et al., 2010). This dual focus allows family firms to harness the strengths of both tradition and innovation, leading to competitive advantages (Ratten et al., 2021).

Despite extensive research on the paradoxical tension between tradition and innovation in family firms, significant gaps remain in understanding how these firms manage this tension in practice. While previous studies have highlighted potential strategies such as governance mechanisms, ambidextrous organising, and aligning firm characteristics with strategy (De Massis et al., 2015; Oinonen et al., 2018), they fall short in explaining how these approaches are implemented across diverse family firms or how they evolve over time. Moreover, the literature presents conflicting views on whether tradition acts as a barrier or enabler of innovation, leaving unresolved questions about the conditions that allow these elements to coexist harmoniously (Erdogan et al., 2019; Szymanska et al., 2019). Furthermore, the dynamic nature of family firms, where priorities may shift with leadership changes or family events, complicates efforts to manage evolving tensions (Aldrich and Cliff, 2003).

This article sheds light on the still-unclear dynamics of how family firms manage the tension between innovation and tradition. While previous research has identified the potential conflict between these two elements, it has yet to understand how family firms navigate this tension in practice comprehensively. Given that family firms are dynamic and evolve over time, despite theories often describing their internal relationships as fixed and definite, this study seeks to offer a theoretical explanation of how these firms reconcile the need for innovation with the preservation of tradition. This research builds on family embeddedness as the theoretical lens of managing such tensions. This study's central research question is: How do family firms manage the tension between innovation and tradition?

2. Literature review

2.1 Innovation, tradition and its tensions in family firms

In family firms, innovation is defined as generating new or improved products, processes, and organisational systems that enhance the firm's ability to compete and grow (Covin and Slevin, 1991; Zona et al., 2013). Bessant et al. (2005) describe innovation as “the core renewal process in any organisation” essential for both survival and growth, as it involves changing what the firm offers and how it delivers value (p. 1366). Innovation in family firms is often tied to an entrepreneurial spirit, which keeps the firm relevant in a complex business environment and improves performance (Arzubiaga et al., 2018). This process is critical to maintaining market position and ensuring long-term survival (Kraus et al., 2023). However, family firms often prefer incremental innovation—small, continuous improvements—due to lower financial risks and a focus on preserving the family's socioemotional wealth (Chrisman and Patel, 2012). While radical innovation offers significant competitive advantages, its high financial demands make it less common in family businesses, which tend to favour a gradual renewal process (Hu and Hughes, 2020).

Tradition in family firms is deeply tied to family member's involvement in the business's ownership and management, making it a key differentiator from non-family firms (Basco and Pérez Rodríguez, 2009). In family firms, control is more personalised, with decisions strongly influenced by the family's values and relationships rather than institutional processes (Dekker and Hasso, 2016). Tradition plays a crucial role in shaping long-term orientation, as family firms often prioritise stability and the preservation of the family's legacy over rapid growth, which can lead to sustained success across generations. Additionally, tradition allows family firms to exploit values embedded within the family, such as trust, loyalty and shared goals, which are beneficial when conducting business (Mustakallio et al., 2002). These social relationships among family members influence the allocation of resources and decision-making processes, reinforcing the importance of tradition as a source of continuity and competitive advantage in family firms (Dyer, 2003). Thus, tradition is a cultural inheritance and a strategic asset that shapes individual and organisational outcomes.

Tensions between tradition and innovation in family firms often arise from competing priorities of maintaining long-established values while adapting to a changing business landscape. One source of tension is the conservative approach family members may take, where the desire to preserve control and stability can lead to risk aversion and reluctance to engage in innovative activities (Duran et al., 2016; Robles, 2020). This focus on continuity may hinder the exploration of new business models or technological advancements (Hu and Hughes, 2020). Another tension is linked to the firm's long-term orientation, as the goal of ensuring the firm's longevity across generations can conflict with the need for flexibility and rapid adaptation to stay competitive in fast-paced markets (Zellweger et al., 2012). Moreover, the paradoxical relationship between tradition and innovation is in itself problematic. While these two elements seem contradictory, they are also interdependent, creating a complex dynamic. On one hand, innovation requires breaking with the past, while on the other, tradition can provide the stability and values needed to foster trust and a solid organisational culture (Matzler et al., 2015). This paradox underscores how family firms must navigate both forces simultaneously, as family traditions can either constrain or enable innovative efforts depending on how they are managed (Erdogan et al., 2019). The simultaneous need to preserve tradition and support innovation creates a challenging but potentially advantageous tension within family firms.

In line with the tensions between tradition and innovation, recent studies further illuminate how family firms navigate the complexities of balancing these forces. For example, de Groote et al. (2021) highlight how multilevel factors influence a firm's ability to respond to disruptive innovations. They emphasise the importance of individual-level perception filters in recognising opportunities, which must be addressed before firm-level barriers can be tackled during the implementation phase. Their conclusion aligns with the notion that tradition, rooted in individual and collective beliefs, can shape how innovation is perceived and acted upon. Meanwhile, Leppäaho and Ritala (2022) point out how family firms' ability to accumulate slack resources during stable periods offers a buffer that can be strategically deployed during crises to foster innovation. This approach suggests that the long-term orientation of family firms, often seen as a conservative force, can support innovation under specific circumstances. Similarly, Turienzo et al. (2024) stress the importance of leveraging digitalisation to avoid obsolescence, highlighting the threat posed by emerging business models that challenge traditional operations, particularly in industries like logistics. Finally, Liao and Liu (2024) bring a cultural dimension to this discussion, showing how Confucian values can enhance the quality of environmental innovation, further underscoring the complex ways tradition can shape and even bolster innovative efforts.

2.2 Family embeddedness in tradition and innovation

Family embeddedness refers to the intricate connection between the family and the business, where the family's values, dynamics, and resources significantly shape the firm's operations and strategies (Aldrich and Cliff, 2003). This perspective is crucial for understanding the tension between tradition and innovation in family firms. Family dynamics, including long-held traditions and values, often drive decision-making, creating a strong attachment to the past that can resist change. This embeddedness in tradition provides stability and continuity across generations, helping to maintain the firm's identity. However, it can also hinder innovation as firms struggle to balance preserving these values with the need for adaptive and innovative strategies (Le Breton–Miller and Miller, 2015). At the same time, family-specific resources, such as trust, loyalty, and early generational involvement, create advantages by enhancing the firm's human capital and knowledge base, which are critical for future growth (Sirmon and Hitt, 2003).

Additionally, family firms benefit from intergenerational involvement, where younger members introduce fresh perspectives and innovative ideas while remaining rooted in the firm's established values (Le Breton–Miller and Miller, 2015). This combination of tradition and new approaches creates a dynamic where innovation is nurtured without undermining the core principles that define the family business. Family embeddedness, therefore, plays a dual role—it can slow innovation due to the weight of tradition. However, it also provides a strong foundation for growth when family resources and values are aligned with progressive strategies. This makes family embeddedness a crucial framework for understanding how family firms balance maintaining tradition and embracing innovation (Aldrich and Cliff, 2003).

2.3 Managing tensions

When managing tensions between innovation and tradition in family firms, one of the critical strategies involves understanding and leveraging the firm's heritage. Family firms often have deep-rooted values, customs, and traditions, forming their identity's foundation (Schuman et al., 2010). These traditions can serve as valuable reference points for innovation, as they provide a sense of continuity and legitimacy. By viewing new ideas as extensions of past successes rather than disruptions, family firms can frame innovation as a progression of their historical values, making it easier to integrate new approaches without alienating those prioritising tradition (Suddaby and Jaskiewicz, 2020). This perspective maintains the integrity of the firm's legacy and allows it to create a narrative supporting innovation while honouring its historical roots (De Massis et al., 2015). However, this approach requires careful management of traditions to ensure they remain relevant in a rapidly changing environment (Magistretti et al., 2020).

The diversity of perspectives within family ownership also plays a critical role in managing tensions between tradition and innovation. Inter-generational ownership often leads to conflicting views, where older generations may prioritise preserving established practices while younger family members push for new ideas and technologies (Salmon and Allman, 2020). These generational differences can be a source of conflict or an opportunity for creative solutions. If managed effectively, integrating diverse perspectives can lead to a balanced approach where innovation is tempered with respect for tradition. Conversely, failure to address these conflicts may stifle innovation or lead to impractical strategies that ignore the wisdom embedded in the firm's historical experience. A critical factor in managing these tensions is fostering open communication among family members and creating mechanisms that allow diverse opinions to contribute constructively to the firm's strategic direction (Hyslop et al., 2023).

Leadership within family firms also requires a nuanced approach to managing these tensions. Leaders who can navigate between seemingly contradictory demands, such as maintaining stability while fostering change, are better equipped to promote innovation without compromising the firm's core values (Ingram et al., 2016). This ability to balance opposing forces is crucial in family firms, where leaders must often mediate between family interests and business needs. By accepting complexity and adopting a holistic view, leaders can integrate innovation into the firm's operations without disruptions. This leadership style encourages employees to embrace change and remain adaptable, enhancing the firm's innovation capacity while maintaining continuity (Hu and Hughes, 2020). Leaders who resist the temptation to favour one side of the tension over the other are likelier to foster an environment where tradition and innovation coexist (Zhang et al., 2014).

Another critical aspect of managing these tensions is how family firms structure their decision-making processes. While family members often hold significant influence due to their ownership and emotional ties to the business, including non-family members can provide valuable outside perspectives that help mitigate the risks of over-reliance on tradition (Patel and Cooper, 2014). A balanced decision-making process incorporating family and external voices allows for a more comprehensive evaluation of innovative opportunities, ensuring the firm remains competitive without losing sight of its heritage. However, the challenge lies in ensuring that non-family members are given enough authority and voice in the decision-making process, as this can sometimes conflict with the family's desire to retain control over the business (Stewart and Hitt, 2011). Therefore, balancing family and non-family involvement is essential for effectively managing the tension between tradition and innovation.

3. Methodology

This study adopts a comparative case study methodology to explore how family firms manage the tensions between tradition and innovation. As part of qualitative research, the comparative case study approach allows for an in-depth examination of multiple family firms, making it suitable for investigating how these tensions are perceived and managed in different contexts (Kaarbo and Beasley, 1999; Yin, 2009). Qualitative methods, such as interviews and detailed analysis, are coherent with the study's goal of understanding complex organisational dynamics through interpretive inquiry (Choy, 2014; Saunders, 2009). Furthermore, Sweden's choice as the context for the study is highly relevant due to the strong tradition of family firms in the country, which are known for their long-term orientation (Zellweger et al., 2012). At the same time, Sweden is recognised for its focus on innovation, making it a suitable environment for studying the tensions between these two aspects (Matzler et al., 2015). The combination of tradition and innovation in Swedish family firms provides a rich ground for understanding how these seemingly contradictory forces can be managed effectively.

3.1 Sampling

In this study, purposive sampling was employed to select family firms in Sweden that met specific criteria relevant to exploring the tension between tradition and innovation. This non-probability sampling method was deemed appropriate because it allows for a strategic selection of cases most suitable for answering the research question (Easterby-Smith et al., 2021). The rationale for selecting Swedish family firms stems from Sweden's reputation as a hub for innovation, alongside its strong tradition of family-owned businesses, providing a rich context for examining how these firms balance innovation with longstanding traditions (Colli and Larsson, 2014). Additionally, Sweden's well-developed business environment and relatively high levels of digitalisation make it an ideal setting to explore the impact of technological advancements on family firms (Fitz-koch and Nordqvist, 2017).

The inclusion criteria required that the firms be family-owned, involve more than one family member in ownership and operations, including at least two generations, and have a minimum of 10 employees. These firms were also selected based on their demonstrated engagement with innovation, specifically having introduced at least one new product or service in the last two years. The previous process ensured that the cases chosen were representative of traditional family firms and actively involved in innovation, making them well-suited for investigating the complex dynamics of tradition and innovation in this context (Bell et al., 2022).

To identify suitable companies, we conducted thorough internet searches using Swedish language terms related to family businesses and relied on recommendations from individuals knowledgeable about the business environment in Sweden (Patton, 2002). After identifying four potential firms, we initiated contact by emailing the CEOs to set up virtual meetings where we could confirm the firms' alignment with our criteria and provide further details about the study. Once the four companies were confirmed, we conducted interviews with the CEOs and interviews with older family members and non-family employees to gather a broad range of insights. This selection of four firms proved sufficient to empirically illustrate the topic of this study, as the diversity of their experiences and practices provided a rich understanding of how family firms navigate the tension between tradition and innovation. After collecting data from the fourth company, we reached a point of theoretical saturation (Magnani and Zucchella, 2019); no new stories or insights emerged, indicating that our findings accurately captured the complexities and dynamics inherent in managing this tension across family firms.

3.2 Data collection

Interviews are an effective data collection method for this study because they allow an in-depth understanding of how family firms navigate the tensions between tradition and innovation. Semi-structured interviews, in particular, provide flexibility, enabling the exploration of specific topics while allowing new themes to emerge during the conversation (Saunders, 2009). This format is ideal for capturing the nuances of complex dynamics like the balance of innovation and tradition, which can differ significantly between family firms depending on their unique histories and organisational cultures (Bell et al., 2022). Interviews also provide direct insights into the experiences and perspectives of key stakeholders, which are crucial for understanding the decision-making processes within these firms (Easterby-Smith et al., 2021). To ensure consistency while allowing flexibility, we prepared an interview guide based on our literature review, focusing on key themes like traditions, innovation, and governance. This guide helped structure the interviews while allowing us to ask follow-up questions tailored to the participants' responses.

For the data collection process, we conducted 10 semi-structured interviews across four family firms in Sweden. The interviews were completed in two rounds. In the first round, we interviewed the CEOs of all four family firms, aiming to capture their leadership perspective on the balance between tradition and innovation. After analysing the initial interviews, we conducted a second round, which included six additional interviews: one with a non-family employee from each firm and one with a member of the older generation in two firms. Unfortunately, the older generation in the other two firms declined participation. The interviews varied in length, ranging from 37 min to 1 h and 39 min. All interviews were recorded, and detailed notes were taken to ensure the accuracy of the data. Despite conducting only ten interviews, the multilevel perspectives of the respondents and the in-depth nature of the discussions provided rich and valuable insights. The follow-up interviews aligned coherently with the initial data collected. Additionally, all participants held senior positions, and we were able to include representatives from more than one generation. Table 1 shows more details regarding the interviews that were conducted. The interviews were then transcribed using an AI transcription tool, followed by manual review and translation from Swedish to English, ensuring the data was accurate and ready for analysis. Moreover, we collected secondary data to triangulate the stories collected from the interviews to ensure validity and reliability. These secondary data were mainly private (internal communication memos, strategy documents and meeting minutes) and public documents (website information, news articles and brochures).

3.3 Data analysis

The data for this study was analysed using a structured thematic approach, adhering to the procedures outlined by Saunders (2009) to ensure clarity and organisation. Initially, we categorised the data into recurring themes identified across the interviews, a method known as thematic analysis (Bell et al., 2022), employing colour coding to classify data into key categories such as family control, tradition, and risk tendency. This process was further guided by the framework developed by Gioia et al. (2013), which utilises a three-tiered structure consisting of first-order concepts, second-order themes, and aggregate dimensions to interpret the empirical data. The analysis began with open coding, where the researcher, a native Spanish speaker, applied active-form codes to deeply explore the latent meanings in participants' narratives (Thornberg and Charmaz, 2014). This was followed by focused coding, categorising the first-order codes based on central ideas, patterns, and recurring themes (Gioia et al., 2013). These categories were then refined into second-order themes that encapsulated the core meanings expressed in the data. Finally, thematic grouping synthesised these themes into broader aggregate dimensions, comprehensively understanding the key factors shaping participants' experiences. Based on the data analysis process outcomes, we created a data structure table and a grounded model, which can be found further in the article. The data structure is included in Appendix 1 and additional quotes from the interviews are included in Appendix 2.

After coding, the categorised data was reviewed with secondary data, such as company websites, to validate the participants' claims and further contextualise the findings. This triangulation of primary and secondary data helped us explore whether internal values mentioned in the interviews were also reflected externally. Additionally, we continually moved between the empirical data, literature, and secondary sources to develop plausible interpretations (Bell et al., 2022). This was especially important when participants claimed not to have clearly defined traditions yet spoke extensively about underlying values, leading us to infer that longstanding principles might be so ingrained that they go unrecognised.

To ensure the trustworthiness of this study, we adhered to the concepts of credibility, transferability, dependability, and confirmability (Lincoln, 1985). Credibility was addressed by triangulating our data sources and interpretations, including interviews with CEOs, family members, and non-family employees, to ensure confidence in the accuracy of our findings. Transferability was ensured by presenting precise, detailed data and employing theoretical concepts, allowing our findings to be applicable in other contexts. To establish dependability, we provided a transparent and consistent research process by using evidence systematically and documenting our methods. Finally, confirmability was achieved by objectively presenting evidence, avoiding personal biases or oversimplifications, and ensuring our conclusions were grounded in the data rather than assumptions.

3.4 Ethical concerns

This study rigorously addressed ethical considerations in collecting and handling data from semi-structured interviews, adhering to principles of privacy, confidentiality, and informed consent (Bell et al., 2022). Before conducting interviews, participants were informed about the study's purpose, the handling of their data, their right to withdraw at any time, and their ability to skip questions, ensuring informed consent (Qu and Dumay, 2011). To protect confidentiality, codes were used to anonymise both the organisations and the participants. The data was securely stored using the University's cloud services, with a plan for its removal post-publication. Compliance with the General Data Protection Regulation (GDPR) was strictly followed, including using a GDPR-compliant consent form and allowing participants to review and amend their transcripts to ensure accurate representation (Qu and Dumay, 2011). Additionally, when employing AI tools such as Klang.ai for transcription, we ensured that the service adhered to GDPR requirements, including deleting data after transcription.

4. Findings

4.1 Case organisations

This study examines four distinct family firms in Sweden, each notable for its unique characteristics and innovative approaches. Firm A, a small-sized industrial company established in the 1970s, is operated by the second generation while the founding family's first generation remains active. Despite its global customer base in the automotive industry, Firm A remains focused on the Swedish market. It integrates innovation through a dual approach: internal technological advancements and external market demands, reflecting its commitment to both preserving heritage and addressing future needs. Firm B, founded in the 1940s and now managed by the third generation, specialises in construction components. It innovates through enhanced workmanship and efficiency rather than rapid technological changes, balancing traditional values like quick deliveries with the risks of maintaining large inventories for new products. Firm C, the youngest and smallest firm, has been operational for nearly 20 years and is led by the second generation. Its innovation is driven by the need to handle complex chemical and quality requirements, aiming to strengthen client relationships through long-term trust rather than attracting new customers. Lastly, Firm D, the largest and oldest of the four, was founded over a century ago and remains family-operated. It has evolved from its initial business idea to become the largest family firm in its market segment in Sweden. Firm D's innovation strategy focuses on integrating new technologies, such as 3D printing, virtual reality, and artificial intelligence, to meet customer-specific needs and stay competitive in a fragmented market where it stands out as one of the few remaining family-owned firms.

4.2 Tradition

Tradition is critical in shaping how family firms in Sweden navigate transitions, manage resources, and uphold values. Transitioning across generations is particularly evident in Firm A, where the tradition of including family members from a young age in the business facilitates smooth generational shifts. Participant A1 noted, “My parents have always included us in the firm. We have been included in everything since we were kids, but we have also been able to say no, I do not want to do this today.” This inclusive approach helps transfer knowledge and values and maintains continuity in leadership. Similarly, Firm C's cautious approach to project management, rooted in the founders' early experiences, reflects a tradition of careful evaluation before taking on new projects. Participant C1 mentioned, “I think it comes from that they were only two when the firm was founded; they were vulnerable and did not want to take excessive risk”, highlighting how these traditions ease transitions and mitigate risks.

Their traditional practices deeply influence resource management within these firms. Firm B, for instance, has a longstanding tradition of rapid delivery and hard work, which is integral to its resource management strategies. Participant B1 stated, “Our customers know that they can always come to us, and we will help them”, illustrating how resource allocation is geared towards maintaining high service levels and customer satisfaction. In contrast, Firm D's tradition of avoiding debt and paying for investments upfront demonstrates a conservative approach to managing resources. Participant D1 explained, “We strive to pay all investments upfront. Of course, we lent money when we built our new warehouse, but we paid it off quickly.” This tradition ensures financial stability and reflects a strategic resource management approach prioritising long-term security over short-term gains.

Values deeply embedded in these family firms guide their operations and culture. Firm A's commitment to family involvement and employee welfare is a core value that shapes its organisational environment. Participant A2 noted, “The fact that the family prioritises the firm benefits us employees. They are really passionate about their firm and always think about us employees and how things should be as good as possible.” Firm C's approach to customer service and project selection mirrored the value of caring for employees. Participant C2 remarked, “The customer is the focus of their attention. Firm C is good at taking care of customers, even when the customer is unsatisfied.” Another example is Firm D's value of maintaining a small-business ethos despite its larger scale. Participant D1 emphasised, “We always strive to feel like a small business. I say that to all our customers.” These values, rooted in tradition, influence internal practices and shape how these firms engage with their business environment in Sweden.

4.3 Innovation

Innovation occurs differently across the studied firms, often shaped by their history, market demands, and internal strategies. For Firm A, innovation is an intentional and strategic component of their business model, where they strive to lead the industry through a combination of structured processes and experimental approaches. As Participant A1 explained, “Some say that innovation is when you go bananas. Some say that it is a process of development. For me, it is something in between. For us, innovation is when we have a goal, but we are not sure of how to reach that goal.” This mindset is operationalised through formal initiatives such as their innovation budget and dedicated innovation employees, along with events like innovation races, where they invite outsiders to contribute ideas. As Participant A3 noted, “Since the very start, we have tried to find solutions that do not exist. Innovation is to find solutions to things that are much smarter than the solutions that already exist,” illustrating how deeply innovation is ingrained in Firm A's culture and strategy. This proactive approach also extends to using VR for employee training, which exemplifies how the firm continuously seeks new technologies to improve operations. Participant A2 added, “The way we are always early to try new technology builds a competitive advantage and allows us to be one of the best actors in the industry”, reinforcing the idea that innovation is not just about creativity but about maintaining leadership in the market.

In contrast, innovation at Firm B is more reactive and situational, driven primarily by customer needs rather than a formal strategy. Participant B1 emphasised, “We must be proactive and be ahead of our competitors. If our customers are missing something on the market, we should be the ones to fix that gap.” While the firm recognises the importance of staying ahead, innovation is more of a tool for customer satisfaction than a core strategic focus. Participant B1 admitted, “When we make a profit, we can afford to take more risk and try more innovative solutions. But if we are at break even, we will be more careful”, indicating that innovation is tied closely to the firm's financial health and not always a priority. On the other hand, Firm C views innovation through the lens of sustainability, where external pressures from customers and societal expectations drive change. As Participant C1 put it, “Innovation for us is to keep up with the development in the industry. And right now, that development is mainly about becoming more sustainable”, signalling that their innovations focus more on process efficiency and environmental impact than product innovation. For Firm D, innovation is more incremental and continuous. They value flexibility and quick adaptation, with Participant D1 stating, “We make small, small improvements all the time”, describing their preference for gradual evolution over radical change. Yet, their commitment to being at the forefront of technology is evident in their early adoption of 3D printers and VR systems, and as Participant D1 explained, “We are the first in the industry to have a license for that system. We like that kind of thing”.

4.4 Tensions between tradition and innovation

The tensions between tradition and innovation in these family firms emerge as they attempt to balance deeply rooted practices with the need for continuous change. While some respondents argued that innovation is part of its identity in Firm A, tensions arise in how new technological advancements align with traditional values. Participant A2 explained, “We are always early to try new technology”, but added that new initiatives must carefully fit within the firm's long-established reputation. The lack of fit between novel technologies and longstanding values could create conflict at strategic levels. For instance, it could be challenging to set goals pursuing technological development that conflict with family values. The previous conflict unfolds a cautious approach, where innovation is weighed against the company's foundational principles, reflecting a tension between preserving tradition and pursuing innovation. In Firm B, the tension is more pronounced, as innovation is less ingrained in the firm's culture. Although recent leadership changes have introduced a stronger focus on innovation, the firm continues to rely on traditional, intuition-based decision-making rather than formalised innovation strategies. Participant B1 noted, “We still rely a lot on gut feeling”, revealing a conflict between the newer generation's push for structured innovation and the historical preference for instinct-driven business decisions. The previous situation creates tension, as the firm's traditional values hinder the development of a consistent innovation strategy. Firm C experiences tension primarily due to external market pressures, particularly sustainability. Participant C1 remarked, “The industry is not very innovative, but customers now demand more sustainable products”, highlighting the collision between the firm's long-established production methods and the need for sustainable innovation. This tension forces the company to balance tradition with customer demands for more environmentally friendly solutions, challenging the firm's adherence to historical practices. Firm D's incremental innovation strategy reflects a subtle tension between gradual improvements and the potential for more disruptive changes. Participant D1 commented, “We believe in evolution instead of revolution”, indicating that the firm values tradition by making minor, continuous improvements. However, their early adoption of technologies such as 3D printing and virtual reality shows that, while they are open to innovation, they carefully navigate the risk of diverging too much from their traditional business model. Across all firms, the tension between tradition and innovation manifests as a balancing act between maintaining the values that define their identity and embracing new ideas essential for future growth. Table 2 below summarises the emerging tensions in each of the firms.

4.5 Managing the tensions

4.5.1 Forward thinking through heritage

The family firms manage the tensions between tradition and innovation by intertwining these elements, using tradition as both a foundation and a catalyst for forward-thinking innovation. In Firm A, while innovation is embedded in the organisational culture, tension arises in balancing preserving long-held practices with the push for new ideas. Participant A3 explained, “Innovation is when we try to come up with ideas that in the boundaries of what historically has been considered of value in the organisation”, highlighting how traditional resource management values drive and complicate their innovative efforts. In another example, the firm pursues a VR training program that embraces technological advancement; however, it must also align with the established methods and values that define the organisation's identity. Thus, in the example of Firm A, tradition becomes a boundary system that limits how innovation unfolds. In Firm B, the coexistence of tradition and innovation is underscored by the current generation's efforts to blend new approaches with the firm's historical practices. Participant B1 remarked on the generational shift during the pandemic, noting how the older generation's cautiousness provided stability while the younger generation sought innovative methods: “It was scary for them when we came into the firm and just did things in a new way.” This testimony reveals a tension where tradition can sometimes hinder the pace of innovation, as reliance on past methods often conflicts with the need for change. Nevertheless, in times of increased uncertainty, tradition acts as a foster for innovation, which provides stability and caution. Firm C navigates similar challenges; the customer shapes its innovative efforts needs in a conservative industry. Participant C1 suggested, “Tradition, innovation, and risk can be seen as a triangle”, indicating that the firm uses its historical practices to assess the risks of new initiatives while balancing adherence to established norms. In Firm D, the tension manifests in their preference for incremental innovation over radical change. Participant D1 noted, “We believe in evolution instead of revolution”, signalling a commitment to stability when pursuing innovation.

4.5.2 Paradoxical thinking

The family firms under study rely on paradoxical thinking to manage the tensions between innovation and tradition. For instance, in Firm A, Participant A1 acknowledged that the firm juggles over 70 projects, revealing the struggle to prioritise and maintain focus: “We have almost forgotten about some projects since we have focused more on others”. The previous testimony illustrates the delicate balance between pursuing new opportunities and managing established operations. Similarly, Participant B1 shared how generational differences shape the firm's approach to innovation, with younger members pushing harder for change while older ones remain more cautious. This contrast is managed through collaboration and employee engagement, where all voices are heard to ensure that innovative changes are well-integrated. Participant B1 stated, “I challenge them to argue for their opinion; it is valuable to hear what they think”, emphasising the importance of balancing new ideas with acceptance from the established culture. Firm C's paradoxical thinking emerges in its expansion strategy, where relinquishing control over brand presentation to agents in other countries creates tension. Participant C1 admitted the discomfort, saying, “Sometimes when I see their material, I feel like we could have done it better”, but recognised this trade-off as necessary for growth. The previous testimony mirrors Firm D's approach, where the leadership worries about becoming too comfortable while maintaining foundational traditions. Participant D1 stressed that paradoxical thinking is embedded in their culture, saying, “We have some fundamental traditions that we will never abandon … But apart from those things, we are flexible and willing to try new things.” This mindset shows how Firm D leverages both stability and flexibility to navigate market changes. In all cases, the firms employ paradoxical thinking to embrace continuity and change, balancing tradition with the innovative drive needed to stay competitive.

4.5.3 Operational control

Operational control in the four family firms under study reveals a consistent desire to retain ownership and preserve family-oriented identities. In Firm A, Participant A1 firmly stated, “We are not letting go of the ownership of the firm”, highlighting the family's dedication to long-term continuity. This statement reflects how Firm A identifies potential conflict in innovation practices and family control. The respondents argued that innovation is sometimes underpinned by merges that create tensions with family control. Thus, their view in this regard is that operational control should belong to the family and must not be traded for innovation efforts, including any merger. This sentiment resonates with Participant A2, who noted that the firm is part of the family's DNA, stating, “It is not just a job for them; it is who they are”. Concerns about potential shifts in company culture with a non-family CEO were also raised, indicating that the family's involvement is critical in navigating the tension between maintaining traditional values and adapting to modern business practices. From their view, innovation could lead to the inclusion of non-family members gaining important positions in the organisation. Thus, their response to managing such tension aims for operational control to preserve family power in the organisation. Similarly, in Firm B, the family's hands-on approach is seen as both a strength and a limitation, with Participant B1 remarking, “We want to be involved in every little detail”. In contrast to Firm A, in Firm B, it seems that the family needs to be detached from certain decisions regarding innovation. However, to ensure the maintenance of family traditions, Firm B relies on operational control to detach from being involved in every decision while still preserving family values. In Firm C, the decision to keep a family member as CEO reflects their emphasis on competence and alignment with family values. Participant C1 recalled, “It felt good to have their support”, highlighting the emotional connection that influences operational decisions. Firm D mirrors these sentiments, with Participant D2 noting, “The family wants to keep control of the firm for many generations”, reinforcing the importance of operational control to ensure that innovation practices do not entirely take over family tradition. Across all firms, having family members in key leadership roles fosters emotional investment and continuity but raises challenges in balancing familial involvement with operational efficiency.

4.5.4 Governance

Family involvement in all four firms presents both opportunities and challenges in governance. In Firm A, the family's unity facilitates decision-making, but Participant A1 acknowledged the risks of having multiple family members in the business, stating, “We cannot scream at each other; we must lead by example”. To mitigate potential internal conflict and ensure diverse perspectives, Firm A has introduced external board members, which Participant A2 appreciated for providing valuable insights. In contrast, Firm B currently lacks external board members, although Participant B1 recognised the potential benefits of incorporating external perspectives, noting, “It would be reasonable to bring in an external board member … it would have to be someone who understands the firm's traditions”. Meanwhile, Firm C has integrated an external board chair, which Participant C1 described as crucial during sensitive discussions, particularly regarding family member salaries. C1 also recognised that external perspectives help prevent stagnation, as internal views may become insular. Firm D shares a similar sentiment, with Participant D2 emphasising that external board members are beneficial, especially during crises. However, Participant D1 argued that much of the decision-making occurs in daily operations rather than at the board level, making external influence less critical. Nevertheless, the reliance on external members in Firms A, C, and D suggests an understanding of the value of outside expertise in balancing family dynamics and ensuring long-term success. In contrast, Firm B's insular approach reflects deep trust in family governance, even as they acknowledge the potential benefits of including external voices in the future.

4.5.5 Intergenerational learning

Intergenerational learning occurs in all four case companies as family members continuously share insights and experiences. Participants B1, C1, and D1 describe the older generation as providing a foundation of comfort and security, drawing on deep competence and experience. Participant C1 elaborated that the older generation's lifetime working with their products creates broad expertise that is valuable both internally and externally. Participant A1 explained how the younger generation also plays a crucial role in Firm A's operations by managing social media: “The younger generation, mine and my sister's children are doing our TikTok content. They know a lot about that, things that we do not know and things that we would not be able to do without them.” The previous testimony highlights that learning is reciprocal—skills and knowledge flow between generations, enriching the firm's overall success. The emotional ties within these family businesses enhance the willingness of each generation to contribute throughout their lives. Participant B1, from the third generation at Firm B, challenged the common belief that third-generation family members often jeopardise family firms. Instead, they argued that learning from previous generations mitigates this risk. Senior members in Firm B hold formal roles, such as Senior Advisor, underscoring how structured intergenerational learning reinforces the company. According to Participant B1, each new generation enhances the firm's capacity to balance innovation with tradition by building on past lessons. Participants B1 and C1 noted that different generations bring distinct strengths, with C1 stating, “Being born in the 1960s or in the 1990s gives you different characteristics and conditions, and we are good at different things”. This diversity fuels innovation as younger generations build upon and refine the legacy of the older. For instance, Participant B1 linked increased innovation in Firm B to generational transitions that introduce fresh perspectives to longstanding challenges. This intergenerational learning process extends beyond technical procedures; it fosters a broader understanding of the industry, the company, and the confidence to run the business. From an early age, younger generations are immersed in family firms, as illustrated by Participants A1 and B1, who worked in family businesses during their youth, naturally absorbing traditions. Participant A1 emphasised that the next generation's involvement was never forced but rather a natural part of growing up around the firm. Participant B1 echoed this, stating, “Spending much time at the firm as a child and teenager, I got much insight into the firm and how things worked. When I worked here during the summer, I saw our traditions in action” Even when younger members pursue careers elsewhere, as was the case with Participant D1, intergenerational learning persists through ongoing discussions about the business with the previous generation. The previous process ensures they bring both external experience and deep-rooted family knowledge when they return. Thus, intergenerational learning in family firms represents an organic process of skill-sharing, innovation, and experience transfer that evolves and strengthens across generations.

5. Discussion

5.1 Firm-specific approaches to tradition and innovation

The findings from this study contribute significantly to the literature on how family firms manage the tension between tradition and innovation. While previous research acknowledges the paradoxical nature of this relationship (Erdogan et al., 2019), this study uncovers the mechanisms by which family firms harmonise these seemingly conflicting forces. Zellweger et al. (2012) argues that the tension arises from the juxtaposition of commitment to the past and the need to innovate for the future. However, the empirical data shows that all four case companies believe it is possible to combine innovation and tradition, largely by integrating innovation into their longstanding traditions. In Firm A, innovation is part of the tradition, while Firms B and D emphasise innovation without abandoning core values. In Firm C, tradition and innovation are perceived as intertwined forces that drive the company forward. This firm-specific approach to blending innovation with tradition can be explained through the concept of family embeddedness (Aldrich and Cliff, 2003). Each family's unique characteristics shape how they integrate these elements into their business practices. The emphasis on innovation passed down through generations has created an innovative culture in each firm. However, each family's values and norms result in different ways of combining these two elements. Patel and Cooper (2014) suggest that older generations lack the skills to cope with changing environments. Yet, De Massis et al. (2015) argue that past generational knowledge can be leveraged for future success. This study aligns with De Massis et al.'s (2015) findings, illustrating that older generations provide valuable insights and experiences that help younger generations adapt to new challenges.

The tension between innovation and tradition also reflects the influence of socioemotional wealth (SEW), which is a critical differentiator between family and non-family firms (Berrone et al., 2012). SEW, which encompasses the preservation of family values, legacy, and non-economic goals, was a prominent theme in the case companies and shaped their approach to managing this tension. Gómez-Mejía et al. (2007) and Kellermanns et al. (2012) note that family firms prioritise decisions safeguarding SEW, contributing to firm-specific strategies that blend innovation with tradition. For instance, while Firm A fully embraces innovation as its tradition, Firms B and D maintain a more cautious approach, reflecting their desire to preserve core traditions and values. This underscores the firm-specific nature of balancing innovation and tradition, a conclusion supported by Basco and Pérez Rodríguez (2009), who argue that family firms' personal, value-driven perspective contrasts with the institutional approach seen in non-family firms. Additionally, the concept of local embeddedness plays a role in how the case companies perceive and manage this tension. Firms in Sweden emphasise their commitment to preserving regional and industry traditions, aligning with research on local embeddedness, and highlighting the advantages gained from contributing to and being embedded in local communities. As noted by Baù et al. (2018), the tradition of high entrepreneurial spirit within the region also helps mitigate the tension between innovation and tradition, as it fosters cohesion among family members. This study thus reinforces the importance of family and local embeddedness in shaping firm-specific approaches to balancing innovation and tradition while challenging the institutional theory perspective that innovation is driven primarily by organised, institutional processes. In contrast, the innovation process in these family firms emerges from family-driven, firm-specific, and community-rooted traditions.

5.2 A grounded model to overcome the tension between tradition and innovation

Family firms manage the tension between tradition and innovation by leveraging forward thinking through heritage and employing paradoxical thinking, as identified in the findings of this study. Forward thinking through heritage refers to the strategic use of past knowledge to foster future innovation, a process supported by De Massis et al. (2016), who argue that historical insights can help family firms gain competitive advantages in innovation. The case firms in Sweden demonstrate how past knowledge and traditions inform their innovation strategies, showing that tradition does not hinder innovation but serves as a foundation for it. The findings from this study reveal that paradoxical thinking, which could be understood as the ability to balance and integrate contradictory elements, complements forward thinking by allowing firms to explore synergies between tradition and innovation (Ingram et al., 2016). Firms B and D, for instance, base their innovations on core values, demonstrating a harmonious relationship between these seemingly opposing forces. Together, forward thinking through heritage and paradoxical thinking allow family firms to manage tensions and achieve a blend of continuity and progress.

Operational control and governance also play critical roles in managing the innovation-tradition tension in family firms (Gil et al., 2024). Operational control, primarily through family CEOs and direct involvement in decision-making, ensures that traditions and core values are preserved, preventing radical shifts that could undermine the firm's identity. The case firms, especially Firms A, B, and D, emphasise maintaining family leadership to keep the firm's values intact, suggesting that strong family control is central to protecting tradition. On the other hand, governance mechanisms are used to bring external perspectives into the firm, ensuring that the drive for innovation is not compromised by insular thinking. Firms like A and D actively incorporate external board members to inject new ideas and expertise, aligning with Hu and Hughes (2020) assertion that external perspectives are key to fostering innovation. This combination of internal operational control, which guards tradition, and governance structures introducing innovation illustrates a sophisticated balancing act that helps firms navigate tensions effectively.

Intergenerational learning further reinforces the firm's ability to manage the tension between tradition and innovation by ensuring knowledge transfer and continuous learning across generations. This process allows family members to share experiences, skills, and insights vital for sustaining the firm's strategic direction. Aligned with Hamilton (2011), intergenerational learning is an ongoing process during everyday family interactions in personal and professional settings. This constant knowledge exchange strengthens the firm's ability to integrate traditions with innovations. Intergenerational learning interacts with forward thinking through heritage, paradoxical thinking, operational control, and governance, forming a feedback loop where each mechanism supports the other. For example, the younger generation brings innovative ideas, while the older generation ensures that these innovations align with the firm's core values. Thus, by fostering a culture of shared learning and mutual respect, family firms can overcome the tensions between tradition and innovation, creating a dynamic yet stable business environment. Figure 1 presents the grounded model.

6. Theoretical contribution

This study contributes to the literature on family firms by providing a detailed understanding of how these organisations reconcile the tension between tradition and innovation through firm-specific mechanisms. While previous research has identified the paradoxical nature of this relationship, this study goes beyond theoretical assertions by revealing how family firms actively harmonise these elements in practice. Drawing on the concept of family embeddedness, the findings illustrate that each family's unique characteristics significantly influence how they integrate tradition with innovation. The insights gained from this study challenge existing theories that portray family firms as static entities, suggesting instead that these organisations evolve dynamically over time, adapting their approaches based on generational input and SEW considerations (Berrone et al., 2012; Kellermanns et al., 2012). Moreover, the conclusions from this article emphasise the role of family dynamics in shaping strategies that blend innovation with tradition, thus filling a critical gap in understanding the complexities of family firm management (Aldrich and Cliff, 2003; De Massis et al., 2015).

Additionally, the research introduces a grounded model that illustrates how family firms leverage mechanisms such as forward thinking through heritage, paradoxical thinking, operational control, and governance to effectively navigate the tension between tradition and innovation. The study highlights that forward thinking through heritage allows firms to utilise historical knowledge to inform innovation strategies, reinforcing the argument that tradition can serve as a catalyst for progress rather than a hindrance (De Massis et al., 2016). Paradoxical thinking further enriches this dynamic by enabling firms to integrate seemingly contradictory elements, fostering a harmonious relationship between innovation and tradition (Ingram et al., 2016). The findings also underscore the importance of governance and intergenerational learning in maintaining this balance, demonstrating how family firms can cultivate a continuous knowledge transfer and adaptation culture. By presenting this model, the study not only elucidates the intricate interplay of tradition and innovation in family firms but also serves as a foundational framework for future research in this area (Berrone et al., 2012; Hamilton, 2011).

7. Practical implications

The practical implications of this study emphasise how family firms can strategically manage the tension between innovation and tradition, with significant economic implications for both businesses and policymakers. By utilising mechanisms such as forward thinking through heritage, paradoxical thinking, operational control, and governance, family firms can strike a balance that allows tradition and innovation to coexist and thrive. This balanced approach equips family firms with concrete tools to reflect on their legacy while fostering future growth enhancing their competitiveness in the market. For instance, forward thinking rooted in heritage enables family firms to innovate in ways that respect their identity, which can result in sustained business performance and long-term profitability.

For policymakers, these findings highlight the importance of creating supportive frameworks that encourage family firms to innovate without compromising their traditional values, which are often central to their economic contribution. Policies that promote innovation while recognising the unique structure and dynamics of family businesses can help drive economic growth, as these firms are key players in many economies. Additionally, this study provides valuable insights for firms struggling to navigate this tension, showcasing how successful family firms leverage their traditions alongside innovative processes to maintain market relevance. However, given the firm-specific nature of traditions, these mechanisms should be adapted to the unique characteristics of each firm to be truly effective. Thus, the study serves as a practical framework for family businesses seeking to sustain their legacy while pursuing innovation-driven growth.

8. Limitations and future research direction

In terms of limitations, this study is restricted by its focus on family firms in Sweden, which may limit the generalisability of the findings to family firms in other regions or sectors. Future research could address this by conducting comparative studies in different regional contexts to see if the exact mechanisms apply elsewhere. Additionally, the study's reliance on qualitative methods, though suitable for an in-depth analysis, suggests that a mixed-methods approach could offer broader insights. Incorporating quantitative data, such as surveys, could help validate the model across a larger population. Future research could also explore the integration of risk assessment into the existing model, as risk emerged as a significant factor in managing innovation in family firms, warranting further investigation.

Figures

Figure 1

Grounded model

Table 1

Interview details

Name	Position	Location	Technique	Language	Duration	Date
Participant A1	CEO and family owner	Sweden	Face-to-face	Swedish	1 h 39 min	07/03/2024
Participant A2	Non-family manager	Sweden	Remote	Swedish	42 min	25/03/2024
Participant A3	Previous CEO and family owner	Sweden	Remote	Swedish	38 min	18/03/2024
Participant B1	CEO and family owner	Sweden	Face-to-face	Swedish	1 h 25 min	07/03/2024
Participant B2	Non-family employee	Sweden	Remote	Swedish	40 min	28/03/2024
Participant C1	CEO and family owner	Sweden	Face-to-face	Swedish	1 h 27 min	08/03/2024
Participant C2	Non-family employee	Sweden	Remote	Swedish	37 min	26/03/2024
Participant D1	CEO and family owner	Sweden	Face-to-face	Swedish	1 h 23 min	08/03/2024
Participant D2	Non-family manager	Sweden	Remote	Swedish	43 min	19/03/2024
Participant D3	Previous CEO and family owner	Sweden	Remote	Swedish	41 min	18/03/2024

Source(s): Authors' own creation

Table 2

Tensions in each firm

Firm	Tensions between tradition and innovation
Firm A	Although innovation is deeply ingrained in the firm's culture, new practices must align with traditional values, leading to a cautious approach to implementing new technology. The tension arises from balancing the need for innovation and preserving the firm's established identity
Firm B	Innovation is more recent and less formalised, with a reliance on traditional “gut feeling” decision-making. The tension stems from the generational push for structured innovation, which conflicts with the firm's historical, instinct-driven approach
Firm C	The firm faces external pressures to innovate, particularly around sustainability, which conflicts with long-standing production methods. The tension arises from having to adapt traditional processes to meet customer demands for sustainable products
Firm D	The firm prefers incremental improvements, reflecting a commitment to tradition, but also adopts cutting-edge technologies like 3D printing. The tension lies in balancing gradual evolution with the potential disruption that more radical innovation could introduce

Source(s): Authors' own creation

Appendix 1

Figure A1

Data structure

Appendix 2

Table A1

Additional quotes

Representative 1st order concepts and quotes	2nd order themes		Aggregate theme
Using past knowledge Participant A1: “I have seen examples of being innovative throughout my childhood. Mum and dad have always said that there must be a smarter solution to things.” Participant B1: “It was insane when raw material prices just kept on increasing. The price of the steel we use was doubled. I had never seen anything like that before, and neither had the older generation, but at least they had seen price wars before, and they were more calm than me.” Participant C1: “By using traditions and history from previous generation we can assess the risk of innovation.” Participant D1: “For me it forms a kind of security that I have been involved in discussions about the history of the firm since I was a child. I know how things have worked historically. I have also seen my father handle this job. I have seen that he is just a human of flesh and blood, if he could make this so can I.” Family inclusion from early age Participant A1: “My parents have always included us in the firm. We have been included in everything since we were kids, but we have also been able to say no, I do not want to do this today. And that is something that I appreciate.” Participant B1: “Spending much time at the firm as a child and teenager I got much insight into the firm and how things worked.” Participant D1: “The biggest common interest for me and my father has always been and still is the firm. I am so used to that me, and my father always have spoken about the firm since I was a young.”	Multiple generations operating		Forward thinking through heritage
Local traditions Participant B1: “Our customers know that they can always come to us, and we will help them. Even if we cannot solve their problem, we always try to help them to find the solutions somewhere else. And that is what I enjoy about working in the GGVV-region, if we cannot help our customers, maybe one of our neighbouring firms can.” Participant B1: “There is a tradition of being strong together and try to grow together in the region.” Participant C1: “We chose local, high-quality suppliers as much as possible.” Participant D2: “There is a small business owner spirit in the region, you know how to dig in where it is needed.”	Operating in the GGVV-region		Forward thinking through heritage
Commitment to the local community Participant D3: “We value the tradition of operating in this region, and we would never even think of moving the firm somewhere else.”	Operating in the GGVV-region		Forward thinking through heritage
Firm values passed on Participant B1: “Throughout my childhood I have seen my dad put his soul into the firm. He came home to say good night, and then he went back to work. That has inspired me to keep building on that.” Participant D3: “We want to always pay all investments upfront.” Participant A3: “We always strive to help each other.” Entrepreneurial spirit Participant A2: “Innovation is part of the history here.” Participant B1: “I think that I must do my own mistakes to learn. But never make mistakes that put the firm at risk. One must dare to take risk, but never to make stupid decisions.” Participant C2: “Innovation and tradition is intertwined here; innovation can be built using traditions.”	Traditions and history		Forward thinking through heritage
Curiosity towards new innovation Participant A2: “Participant A1 is curious to try new things […] we invest in new technology and all that. If I have wishes about a new investment, we can often make that happen.” Participant B2: “It is mostly the owners that drive the exploration of new opportunities.” Participant C1: “Innovation is important and has always been important for us.” Willingness to develop Participant B1: When we introduce new things, the employees must agree with that it is good. Otherwise, it will be hard to integrate new things into current operations. We always ask the employees that will be affected what they think about it and what they think is the best solution. Sometimes I challenge them to argue for their opinion, it is valuable to get to hear what they think. Often, we collaborate to find a good solution. I think it is important that they feel included, otherwise they will stop being engaged in the firm Participant B2: “The owners talk a lot about innovation and strive forward.” Participant D2: “The family’s willingness to move forward inspires the rest of us, at the same time we know they have long-term commitment.”	Exploration of new opportunities		Paradoxical thinking
Commitment to customers Participant B1: “We never want to say no to our customers.” Participant B2: “We are known for fast deliveries; the customers know that they can trust us.” Participant C2: “The customer is in the focus of their attention. Firm C are really good at taking care of customers, even in situations when the customer is not satisfied. If the customer has some trouble, someone from Firm C goes there to fix it. I think that makes customers see Firm C as a reliable supplier.” Long-term perspective Participant C1: “We could increase our revenue if we wanted to, but we want to grow more sustainable with a good profit in the long term.” Participant D1: “We are responding fast to our customers, so that we can build long-term trust. If one of our sales offices would make a loss for five years, we would try for at least five more years and just make it work.” Participant D2: “The tradition of having a long-term orientation is shown through our long-term investments. We invest for the future and do not care that much at about temporary trends”		Exploitation of current business	Paradoxical thinking
Different attitudes towards risk Participant C1: “Tradition, innovation, and risk can be seen as a triangle where they all affect each other. By using traditions and history from previous generation we can assess the risk of innovation. But there is also a risk of only focusing on traditions and history and not be innovative.” Participant D1: “We have some fundamental traditions that we will never abandon, such as that we will always stay in the same industry, and we will always have our production in this area. But apart from those things we are flexible and willing to try new things.” Participant D1: “We have no financial risk, so we are never afraid to make investments. If we see that things are going to be better by making the investment, we do not hesitate to do it” Avoiding unnecessary risk Participant B1: “I think that I must do my own mistakes to learn. But never make mistakes that put the firm at risk. One must dare to take risk, but never to make stupid decisions.” Participant B1: “It is always easier to take risk if the firm makes a good profit. If making a risky investment will be the difference between making a profit or a loss, it might be stupid to do it.” Participant C1: “Sometimes it is difficult to explore new opportunities if that means giving up control.”		Risk tendency	Paradoxical thinking
Firm and family needs merged together Participant A1: “The firm is the third child in the family. It is not a job that you have only during eight hour of the day.” Participant C1: “During the first years, we struggled to separate firm issues and family issues.” Participant D1: “If you are really stressed and come home and meet the family and have to talk about the firm again it might be tough.” Discussing firm specific topics in private contexts Participant A1: “Since my partner works here as well, it is easy to discuss work related things at home. I think that is good because we can solve things outside of office hours” Participant B1: “A family is always a family. It is not always like ice cream and ballons to run a firm together. We have almost 100 employees that we are responsible for, and therefore we sometimes must differ between being family and being business partners.” Participant B1: “It is hard for the family to avoid fir related things during birthday parties, but that is because we think it is so fun.”		Balance family and firm	Operational control
Family CEO Participant A2: “If there would come an external CEO, I think there would be tumultuous behaviour among the employees. People would have become worried, including me. We employees knows how the family operates the firm and it would feel uncomfortable if someone else came in and had a lot of other ideas.” Participant B1: “In one way it probably feels comfortable and safe to have a CEO that is part of the family, that is how it always has been here. But it might also imply more fuzzy leadership. If there would have been an external CEO, he or she would walk in and say that this is our goal, and this is how we should reach it. While a CEO that is part of the family can make larger turns faster.” Participant B1: “We are not sitting here twiddling our thumps waiting for others to do the job. We want to be included in every step the firm takes. And that is easier when we have a CEO that is part of the family. That feels safe for us to, since we know what we in the family are capable of. And I think that all of us are afraid of what would happen if we would hire an external CEO that would not be a perfect fit.” Participant C1: “One advantage of having a CEO that is part of the family is that it often means that the person knows more about the firm and is more emotionally engaged than an external CEO would be.” Participant D1: “We have never discussed or considered having a non-family member as a CEO.”		Family control	Operational control
Fast decision making Participant A2: “We can make fast decisions in the firm.” Participant B1: “One of our traditions is that we make fast decisions. If we encounter a situation where we are required to make a large investment in order to make a deal, for example to buy a machine to be able to produce a certain thing, that is often an easy decision for us. If we do not make the investment, we lose the deal and therefore we do not hesitate to make the investment.” Participant D1: “We are only interested in what creates value. To be small, fast, flexible. So, we cherish that very much.” Participant D3: “The best thing about working with family members is that we can make fast decisions. We do not need to ask a lot of other people about if we can do it.”		Family control	Operational control
Inherited responsibility Participant A2: “Firm A is part of the founding family’s DNA, it is who they are. I think that they put too much of their heart into the firm to be able to sell it. It is not just a job for them, it is who they are.” Participant D2: “The family that owns this firms wants to keep it as a family firm and maintain in control of the firm.” Participant D3: “It is so natural that we want to keep the firm, that is always in the back of our heads and affects all our decisions. We have never been interested to let go of the control of the firm.” High family involvement Participant B1: “As long as all family members agree on the same goals, high family involvement is positive in my opinion.” Participant C1: “We keep family members separated in different departments; I think that is good.” Participant C1: “If the firm performs good, I know that it benefits my family members and that feels good.”		Family firm commitment	Operational control
External perspectives Participant A2: “But we think it is good to include people from outside of the firm. Other people are very competent, and then it is just positive if they can contribute with their knowledge and their perspectives. But we want to feel that everyone who is on the board wants what is best for the firm.” Participant A2: “The risk of high family involvement is that we would miss out on external perspectives. But with 65 employees and external board members I think that we cope good with that risk.” Participant D2: “I think that it is positive that we have external members on the board to get other perspectives.” Avoid family conflict Participant C1: “The external board members contribute a lot in questions that can be uncomfortable for family members to discuss, such as if a certain family member has the correct salary” Participant D1: “I think that external members on the board would contribute the most in a potential crisis. But I have not really seen any crisis like that in my 12 years as the CEO of the firm. And apart from the board, I also have a network of other people in the area who I can discuss things with. I think that boards are overrated. It is in the daily operations that things are decided anyway. But I still think that it is good that we have external people on the board.”		Board composition	Governance

Source(s): Authors' own creation