Family Ownership and Innovation Output: Integrating Recource Allocation and Resource Conversion

Tao Han (), Xuedan Tao and Hongbin Tan
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Tao Han: EM - EMLyon Business School
Xuedan Tao: University of Nottingham Ningbo [China]
Hongbin Tan: Tongji University

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Abstract: There has been intense debate on the role of family firms in the innovation process and their impact on innovation output. Empirical work to date presents mixed results, showing that family ownership could have both positive and negative influences. To address this puzzle, we shift the focus from the " family versus non-family " comparison to the variational heterogeneity in family ownership. Importantly, we examine two distinct yet essential mechanisms through which family ownership affects innovation output: its detrimental effect on resource allocation (i.e., R&D investment) and its governance advantages in resource conversion (i.e., transforming R&D input to innovation output). Based on a multiplicative combination of these two underlying channels, we propose an inverted U-shaped relationship between family ownership and innovation output, suggesting that a moderate level of family ownership may enable firms to maximize their innovation output. Using a panel dataset of Chinese listed firms from 2007 to 2020, our analyses confirm this inverted U-shaped relationship and validate the two underlying mechanisms. Our integrated theoretical framework and empirical findings help reconcile the conflicting findings in the literature, providing a more complete account of the relationship between family ownership and innovation output.

Keywords: Socioemotional wealth; Corporate governance; Family business; Resource conversion; Resource allocation; Innovation output; Family ownership (search for similar items in EconPapers)
Date: 2024-08-09
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Published in Academy of Management (AOM) Annual Meeting 84th, Aug 2024, Chicago, United States. ⟨10.5465/AMPROC.2024.21154abstract⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05766396

DOI: 10.5465/AMPROC.2024.21154abstract

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