Family CEO and radical innovation: A stewardship perspective

Abstract

This article integrates the literature on radical innovation, the stewardship perspective, and family business research to develop and test a model examining the influence of a family CEO and the CEO's generational stage on radical innovation, considering different types of family CEOs as distinct manifestations of strategic leaders' stewardship behavior. Furthermore, building on the notion of “doing more with less”, we propose and empirically test the notion of “doing better with less”—specifically, whether the presence of a family CEO enhances the pursuit of radical innovation under resource constraints (i.e., with lower R&D intensity). Using longitudinal data over an 11-year period from 227 listed firms in the automotive and pharma/biotech industries from 29 countries, we find that firms led by a family CEO, especially those led by descendants, excel at radical innovation. Descendant-led firms are also better at radical innovation with lower R&D intensity, suggesting they do better with less. That is, our study shows that family CEOs at a later generational stage serve as catalysts for radical innovation, even under resource constraints. In addition to implications for theory and practice, our findings offer a more advanced understanding of the strategic leadership-innovation relationship in terms of distinct manifestations of stewardship behavior for radical innovation in firms with family leadership.