Intergenerational Knowledge Transfer in Family Firms during Times of Digital Innovation

Abstract

In the fast-changing digital age, the unique governance of family firms, unifying ownership, management and control, characterized by long-lasting knowledge, makes digital innovation particularly challenging. On one hand, the incumbent generation (especially if senior) has developed specific knowledge throughout the experience in the business, being thus more likely to adopt a traditional and conservative approach towards the business model. On the other hand, the next generation of family members’ (especially if junior) has grown up accessing and developing digital knowledge, but might lack the specific skills, organizational know-how and authoritativeness to make it relevant to the family business model. Therefore, the paradigm ‘incumbent generation teaches, next generation learns’ becomes obsolete. How can family firms manage intergenerational knowledge transfer in times of digital innovation? To address this issue, we conduct a multiple case study on five German family firms that have recently digitalized their business models. Building on our findings we develop a model of intergenerational knowledge transfer through which family firms successfully foster digital innovation and introduce the concept of generational metamorphosis as the role swinging in the apprenticeship process requiring family members of different generations to either acting as teachers or learner depending on the knowledge domain. Our study offers contributions to research on family business generational transition, innovation and knowledge transfer.