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In the three following sections, innovation definitions, types, and measurement approaches are presented and discussed. 1 Innovation definitions and types What is an innovation and how can it be defined? This question was first answered by the Austrian economist Joseph A. Schumpeter in the 1930s. Schumpeter (1947, p. ” Although this broad definition is easily comprehensible, it is not applicable to compare research results. , industry, organization, individual). Various researchers have tried to develop a generally accepted definition but to date research on innovation has not agreed on a single valid definition.

But the direction of this effect is controversial. Investigating direct effects in large publicly traded firms is also controversial. Hence, this dissertation considers family ownership in small and medium-sized family firms and its effects on innovation outcomes. 65 66 S&P 500 (Standard & Poor’s 500) is a stock index that includes the stocks of the 500 largest US companies. The Fortune 1000 is a list of the 1000 largest US companies, ranked on revenues alone. The list is maintained by the American business magazine Fortune.

67 See Holderness and Sheehan (1988). 2 19 Performance differences and family control Control rights can be executed directly when the family holds positions in a controlling body such as the (German) supervisory or advisory board, or indirectly when the family announces the persons for such positions. The consequences that arise from the separation of ownership and control are discussed controversially in the literature. For example, Grossman and Hart (1988) and Harris and Raviv (1988) constitute theoretically that with an increasing discrepancy between ownership and control rights market valuation decreases.

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