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Knowledge is power: Gaining knowledge is important for strategic changes

Developing new knowledge is necessary for every firm, including family firms. Based on this knowledge, strategic changes can be initiated and implemented. However, the extent to which new knowledge is recognized, integrated and used in the organization and ultimately also applied for commercial purposes differs from company to company. In order to achieve strategic changes, it is especially important that employees actually use the new knowledge. This mainly happens in firms that combine internal information with external insights and also sufficiently exchange information between the various departments of the organization.

New knowledge can be developed based on internal information as well as on externally collected data. The internal information and knowledge is primarily linked with the performance measurement system that is used in the organization to monitor the performance of the company via a series of indicators in various areas (financial, internal business processes, customer perspective, learning and growth capacity). These performance measurement systems are part of a firm's management control system. Our research has shown that firms find it important to measure financial performance above all. More than 90% of the companies mainly look at the operating result and 70% at the net cash flow. In addition, 76% of the companies follow up on “customer complaints” and 85% of the companies follow up on “staff satisfaction”. It is striking that the more diverse indicators are used in an organization to monitor the performance of the company, the more strategic changes we see. Firms use the information from the performance indicators in two ways: firstly, as a control tool to measure deviations from the stated objectives and to initiate corrective actions if necessary and secondly, as a way to stimulate communication and discussion regarding the strategy and possible changes to this strategy.

When information and knowledge is gathered externally, we notice that more than 70% of CEOs of family firms regularly choose trade fairs, conferences and scientific journals as sources of new knowledge. It is striking, however, that family firms use certain external knowledge sources on a more continuous basis than non-family firms. For example, nearly 9% of family firms make continuous use of consultants, while this is just under 4% for non-family firms. We also see this difference in the collection of information through industry associations (14% for family firms versus 8% for non-family firms) and online communities (8% versus 2.5%). It is also surprising that external laboratories are rarely used as an external source of knowledge, especially in non-family firms. 43% of non-family firms never use these labs, while this percentage is only 24% for family firms. However, the use of this knowledge source is beneficial because this source has a very strong positive influence on the initiation of strategic changes. We also see that the use of consultants, the online communities and the trade fairs, conferences and scientific journals have a positive effect on strategic change in a company.


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