Attention-based View of Family Firm Adaptation to Discontinuities: The Role of Non-financial Goals

Abstract

Adaptation to discontinuous innovation constitutes a major challenge for most incumbent firms. Recent research shows that this is particularly true for family-influenced firms that face specific emotional barriers to non-paradigmatic adoption of new technologies. However, little is known about variance in family firms’ abilities to adapt to such discontinuous innovations. Based on seven longitudinal case studies in the German consumer goods industry we reveal how variance in the family CEOs’ non-financial goals causes substantial heterogeneity in the family firms’ adaptation behavior regarding the type, speed, intensity, flexibility, and persistence of their adaptation. Those behavioral differences can be explained by applying an attention-based view: Variance in non-financial goals of family business owner-managers entails heterogeneity in key decision makers’ sensemaking and subsequently affects organizational adaptation. Our findings contribute to literature by providing a more nuanced understanding of (family) firms’ adaptation heterogeneity and also bring about important implications for practitioners.