Organizational Innovation in Family-Based Business Communities: A Qualitative Study of Adaptation Patterns to Local Market Changes

Abstract

Family-based business communities play a vital role in shaping local economic structures, especially in rural and peri-urban areas. However, pressures from changing local markets, digitalization, and socio-economic disruptions are necessitating innovation in organizational structures and processes within these communities. This study aims to explore patterns of organizational adaptation among family-based business communities in response to these market changes. Employing a qualitative, descriptive approach through case studies of three family business communities in semi-urban Indonesia, the research uncovers that organizational innovation extends beyond technological solutions to include relational, structural, and social dimensions. The adaptation process involves reorganizing family roles, diversifying networks, and modifying internal work cultures. The findings contribute to theoretical understanding by highlighting the significance of social capital and structural innovation in informal sectors. Practically, the study emphasizes the importance of fostering relational trust and flexible organizational structures to enhance resilience and sustainability. This research offers valuable insights for policymakers and practitioners aiming to support family businesses in adapting to contemporary challenges. Additionally, it underscores the need for context-specific and relational approaches in developing effective strategies for organizational innovation in similar settings.