Innovation activities during intra-family leadership succession in family firms: An empirical study from a socioemotional wealth perspective

Abstract

We reason that the intra-family leadership succession phase has distinct characteristics that render it a peculiar time frame for innovation. However, the incumbent owner-manager's willingness to support innovation during that phase is of decisive importance. Building on this argument, the article provides an investigation of how socioemotional factors are related to the owner-manager's perception of the intra-family leadership succession phase as an opportunity for innovation activities in family firms. We use quantitative data from a unique research setting in which family influence in terms of ownership and management, and thus the ability to innovate, as well as major contextual variables were held constant. Overall, the results of our study show that socioemotional factors have both dark and bright sides in the context of innovation. In particular, we find that family adaptability and a family member's closeness to the firm are positively associated with perceiving the succession phase as an opportunity for innovation. On the contrary, intergenerational authority and the history of family bonds are negatively related with the perception of the succession phase as a suitable time frame for innovation. Our findings primarily contribute to the literature on innovation and succession in family firms and emphasize the inherent heterogeneity of family firm behavior.