Family-driven innovation at Delta Cafés

The presence of family businesses in global markets is undeniable and their role as job providers, innovators, and, at times, market leaders, is paramount to the development of local economies around the world. Employing 50% of the workforce in Portugal and accounting for 70% of private-sector businesses,i the gravity pull of family-controlled businesses in Portugal is robust. The following case presents, analyzes, and outlines proposed best contemporaneous practices that, when in effect, drive innovation within family businesses. This case will argue the aforementioned in the context of Delta Cafés, a Portuguese family business specializing in coffee and its ecosystem of products and services. Family-driven innovation as defined by A.De Massis is “the internally consistent set of strategic decisions that allow a family firm to resolve the innovation paradox by ensuring a close fit between these decisions and the idiosyncratic characteristics of the family firm”ii. Management scholars have long studied the intricate nature of innovation and its relationship with businesses’ long-term viability and market-presence. However, such studies have, for the most part, involved non-family controlled firms as the research subjects, which explicates the limited literature available on family-controlled firms. With that being said, to bridge such scarcity of literature this paper will draw upon E. J. Poza who examines, in his adaptation of R. Tagiuri and J. Davis’s threecircles model, the trilateral relationship between the business, family, and ownership business elements in a Venn diagram that seeks to clarify the complex nature of a family business. The inherent overlaps pose challenges to the family firm that non-family controlled firms are largely exempt from. While such challenges would on the surface rightfully suggest that family-controlled firms are at a natural disadvantage, it has not immobilized such firms from fostering innovation. In fact, contrary to such hypothetical disadvantage, family firms can, as this paper will posit, be better positioned to agilely convert innovation inputs into outputs and shorten innovation cycles due to their family-driven nature