The effects of family involvement on proactive R&D management capability: detrimental or beneficial?

Abstract

While previous research has discussed the impact of family involvement on innovation by adopting the agency, stewardship, or resource‐based‐related theories, the results remain inconsistent. Incorporating the perspective of social embeddedness associated with the effects of family social capital, this study provides a better understanding of how family involvement affects proactive R&D management capability (PRDMC), by using continuous assessment of family ownership and the top management team. In addition, board capital is an effective mechanism for family firms; however, directors' human and social capital similar and dissimilar in both backgrounds and networks. We further reveal how heterogeneity and homogeneity of human and social capital affect the relationship between family involvement and PRDMC via the lens of board capital breadth (BCB) and board capital depth (BCD). Our findings show that family involvement has an inverted U‐shaped relationship with the PRDMC. We also find that BCB mitigates the negative effects of excessive family involvement on the PRDMC, but has an insignificant effect at low or moderate levels of family involvement. On the other hand, BCD increases the disadvantages of excessive family involvement on the PRDMC, with an insignificant effect on PRDMC at low or moderate levels of family involvement.