Impact of Workforce Diversity on Innovation: The Anti-Aging Formula for Family Firms

Introduction

Innovation has turned into a trend in scientific discussions and became an important factor in explaining economic development or solving financial and management problems. Innovation is in the lead when it comes to enhancing the growth and prosperity of nations because it is a key factor in achieving and maintaining a competitive advantage for businesses (Dabrowsky & Nowak, 2021). Innovation is a broad research topic for both private and public sectors, as well as all types and sizes of institutions (Moussa et al., 2018).

The rapid changing and unpredictable environment prompt firms to innovate as part of their strategy to remain competitive, a strategy that can’t be achieved without the expertise and creativity of diverse human capital operating within the organization. Urbancová et al. (2020) and Don-Solomon & Fakidouma (2021) found that an appropriate application of diversity management can be a source for achieving innovation, performance, and competitive advantage.

Several studies consider the workforce diversity namely age diversity and gender diversity as key determinants of innovation. For example, Dai et al. (2019) and Xie et al., (2020) found that the implication of female in the workplace could develop the level of innovation. They stated that female contribution is an unexploited resource for organization’s innovation. Some others like Coleman et al. (2019), Kunze et al. (2013) and Backes-Gellner & Veen (2013) indicated that age diversity in workplace is an important factor that leads to enhance prductivity and innovation. Mothe & Guyen (2021) stated that age diversity in workplace can develp the level of innovation and thus, leads to increase the overall performance.

However, the previous studies on innovation lack the focus on what and who can contribute to enhance the innovation in family firms. This deficiency in the literature leads to make gender and age diversity as potential invisible factors that could improve the innovation within the family firms. Many studies considered age and gender diversity as control variables (Alsos et al. 2013) and thus, could lead to ignore very important factors that can extend the sustainability of family business. Here, an important question could arise: can workforce diversity lead to enhance the innovation in Lebanese family firms?

In the case of family firms, development and sustainability are less probable due to family management and strategic practices. Most often, the family members do not open the capital of their business to avoid the dilution of their ownership (El-Chaarani, 2013; Bernice & Folker, 2007; El-Chaarani and El-Abiad, 2017). As a result, the family business could face the risk of bankruptcy in a dynamic environment characterized by the existence of a high level of competition and globalization (El-Chaarani and El-Abiad, 2019). Therefore, family members have to avoid the conservative management style and weak reaction to external environmental change (Daily and Dollinger 1993). They must enhance innovation and motivation through the implementation of trust and sense of involvement (Lee, 2006).

For EL-Chaarani (2014), innovation is a key success factor since it helps family members to sustain their business without opening their capital and losing control of their firms. Zellweger et al. (2012) argued that innovation is an important factor to sustain the presence of family members on the top of their businesses.