Parental leave in management can strengthen small business development

Parental leave is often seen as beneficial for families and society as a whole—but it is sometimes perceived as a potential problem in small firms. When key members in these firms are absent for a period, it is assumed that the pace of development may slow down. A new study from Jönköping International Business School at Jönköping University does not support this view.

On the contrary, parental leave within management teams can be linked to increased innovation.

The study is based on data from 3,196 Swedish small and medium-sized enterprises and examines the relationship between parental leave in the management team and firms’ ability to develop new products and services. The results reveal a positive association in companies with small management teams and in firms where team members have worked together for a long time.

“There is a widespread concern that parental leave in management will weaken the development capacity of small firms. Our results instead show that it can create space for renewal,” says Lucia Naldi, Professor of Business Administration at Jönköping International Business School and the project leader of the study.

New opportunities when responsibilities are redistributed

When a member of the management team is on parental leave, others need to take on greater responsibility. This can bring new perspectives into decision-making and allow knowledge from other parts of the organization to be utilized. At the same time, individuals returning from leave may contribute with new insights and experiences.

“Changes in responsibilities and roles can give rise to new ideas, ways of working, higher efficiency in performing their tasks. In many firms, this appears to act as a positive trigger for innovation,” says Massimo Baù, Professor of Business Administration at Jönköping International Business School and one of the researchers behind the study.

The study also shows no clear differences between mothers’ and fathers’ parental leave when it comes to its link to innovation and renewal. This suggests that what matters most is how the company and its management team function and not who takes the leave.

Relevant findings in a country of small businesses

In Sweden, 99.9 percent of all companies are small and medium-sized enterprises, making these findings particularly relevant. Parental leave is often discussed from a family or gender equality perspective, but less frequently in terms of its impact on firm development.

“Our results show that parental leave in management should not necessarily be seen as an obstacle. In many cases, it can instead contribute to long-term development and innovation in small and medium-sized enterprises,” says Massimo Baù.