Digital innovativeness in family firms: The role of non-family managers and family goals

Abstract

Digital innovations offer immense opportunities for organizations to reinvent their business model and renew their product and service offerings, yet, due to their complexity, rapid pace and generativity, they are also perceived as riskier than regular innovations. Since family firms are often more risk and loss averse in their innovation approaches, they might struggle to adopt digital innovations, which begs the question which governance conditions foster the adoption of digital innovations. To investigate this issue, the article examines the relationship between the share of non-family members in the top management team, transgenerational control intention (TCI) and digital innovativeness in family firms. Based on the risk and loss aversion of family firms and the characteristics of digital innovation, we argue that the presence of non-family managers only has a positive effect on digital innovativeness when the level of TCI is low. An empirical investigation of 104 CEOs of German family firms supports our hypotheses that non-family managers can only unfold their positive effect on digital innovation when the family does not pursue strong family goals. As such, we contribute to the growing research on digital innovation in family firm as well as family firm heterogeneity.