Exploratory Innovation in Family-Owned Firms: The Moderating Role of Digital Search

Abstract

Family firm research agrees that family involvement in ownership gives rise to idiosyncratic innovation behaviors. However, whether family ownership fosters or hampers innovation is still debated because the distinction among the types of innovation outcomes has been often overlooked. To address this gap, we focus on exploratory innovation intensity as innovation outcome (i.e., the ratio between exploratory innovations and all the innovations developed by a firm) to improve our understanding of the family ownership-innovation relationship. Rooted in socioemotional wealth and social capital theories, our arguments posit that family ownership negatively influences exploratory innovation intensity. Recalling the literature on search and recombination, we further propose that this relationship is positively moderated when family-owned firms rely more heavily on digital, information and communication technologies (ICT) related knowledge components during the innovation process (i.e., on a digital search). A panel data analysis of 504 US public limited companies supports both our hypotheses. This article responds to calls for distinguishing exploitative and exploratory innovation outcomes in family firm research. Furthermore, it adds to the digital innovation research by studying the role of digital search as a contingency factor in the pursuit of exploratory innovations and, relatedly, contributes to the literature on search and recombination by underlying that the ICT domain is a relevant search space where to search knowledge to innovate.