(The image displayed above was generated using the artificial intelligence program Midjourney.)

Family-owned Mittelstand firms in the digital world

Family-owned Mittelstand firms, known for their innovation and tradition, face a unique set of challenges in the digital age. While some of these firms have successfully embraced digitalization, others lag. The paper proposes a framework for how these firms can leverage their unique resources to tackle digitalization challenges. To thrive in a digital world, they must harness their family historical capital, family collaborative capital, and family venture capital.

Family historical capital

Family historical capital, which includes the experience and knowledge accumulated over time from company tradition, is crucial for digitalization endeavors. The paper highlights the importance of renewing this capital to succeed in the volatile, uncertain, complex, and ambiguous (VUCA) world. This renewal can be achieved, for instance, by leveraging management succession opportunities within the family.

Family collaborative capital

Family collaborative capital refers to the resources that family firms can develop due to the intimate interaction between family and business. These resources aid in long-term business success and help family-owned Mittelstand firms bridge financial constraints that arise from the absence of external financiers.

Family venture capital

Family venture capital, defined as "equity investment by incumbent firms in independent entrepreneurial ventures," can be critical for the long-term survival of established firms. The paper discusses how resource-constrained and traditional family-owned Mittelstand firms can utilize such investments to gain a competitive advantage.

About the researchers

The research team comprises:

• Julia de Groote, Institute of Family Business & Mittelstand, WHU - Otto Beisheim School of Management, Vallendar, Germany
• Jonas Soluk, House of Innovation, Stockholm School of Economics, Stockholm, Sweden; Institute of Family Business & Mittelstand, WHU - Otto Beisheim School of Management, Vallendar, Germany; Center for Design Research, Stanford University, Stanford, CA, U.S.A.; Department of Business Administration, University of Bern, Bern, Switzerland
• Sarah-Larissa Laue, Institute of Family Business & Mittelstand, WHU - Otto Beisheim School of Management, Vallendar, Germany
• Marius Heck, Institute of Family Business & Mittelstand, WHU - Otto Beisheim School of Management, Vallendar, Germany
• Nadine Kammerlander, Institute of Family Business & Mittelstand, WHU - Otto Beisheim School of Management, Vallendar, Germany