Family ownership and cooperative R&D: the moderating effect of political ties

Abstract

PurposeThis study aims to investigate the impact of family ownership on cooperative research and development (R&D). Drawing on the ability and willingness paradox framework in family business research, the authors suggest that family ownership influences cooperative R&D via two opposing mechanisms: power concentration and wealth concentration. It also deepens the current understanding of the boundary conditions of informal institutions for the impact of family ownership on cooperative R&D by investigating the moderating role of political ties.Design/methodology/approachThe authors analyze a panel of 610 Chinese manufacturing family firms and 2,127 firm-year observations from 2009 to 2017. Fixed effects regression analysis is used to test the hypotheses, with the two-stage Heckman model to address sample selection bias.FindingsThe research findings indicate that family ownership has an inverted U-shaped relationship with cooperative R&D and political ties moderate the relationship in such a way that the inverted U-shaped relationship will be steeper in firms with more political ties than in firms with fewer political ties.Practical implicationsFamily ownership influences firms’ cooperative R&D through the positive effect of power concentration and the negative effect of wealth concentration. Family owners should, therefore, take advantage of concentrated power, for instance, by adapting quickly and committing sufficient resources to cooperative R&D opportunities, while controlling path-dependent relationship development caused by concentrated family wealth. The effect of political ties on the relationship between family ownership and cooperative R&D is found to be a double-edged sword.Originality/valueThis study extends the ability and willingness paradox framework and provides novel insights into cooperative R&D in family businesses by integrating power concentration and wealth concentration associated with family ownership. Moreover, this study provides a contingency perspective and introduces the moderating role of political ties in shaping cooperative R&D in family firms.