The Janus-Faced Family SMEs: Family Management and Digitalization

Abstract

Are family small and medium enterprises (SMEs) more likely to embrace digitalization? While previous research presents conflicting findings regarding the impact of family management in the digital era, our study investigates this question by examining the influence of family management on digitalization. Building on the concepts of restricted and extended socioemotional wealth (SEW), we propose that family management impedes ability of digitalization due to dysfunctional conservatism while encouraging willingness of digitalization due to a long-term orientation. We argue that family management exhibits an inverted U-shaped relationship with digitalization, with moderate levels being most conducive to digitalization. Data from Chinese-listed family SMEs supports our argument. Moreover, we demonstrate that male successors amplify this inverted U-shaped relationship by intensifying the effects of both restricted and extended SEW. Our study expands the understanding of the family's role in digitalization and provides new insights into the diverse effects of family structure on digitalization.