Digital Innovation in Family Firms in Germany and China: TheRrole of National Culture and LTO

Abstract

While family firms share many characteristics, they are also a heterogeneous group that particularly differs across countries, such as China and Germany. Anecdotal evidence suggests that Chinese family firms are more apt compared to German family firms to engage in digital innovativeness, an innovation type that offers opportunities for firms to rejuvenate and ensure longevity. Based on research on family firm innovation, we posit that the lower risk and loss aversion of Chinese compared to German family managers, which results from cultural differences that manifest in different cognitive styles, leads to higher levels of digital innovativeness in Chinese family firms. Further, we argue that long-term orientation positively influences the level of digital innovativeness and that the higher levels of digital innovativeness in Chinese family firms become more pronounced with increasing levels of long-term orientation. An empirical investigation of 105 German and 47 Chinese family firms supports our hypotheses. Our study contributes to research on cross-country research in family businesses as well as on digital innovation in family firms.