Patents, trade secrets and performance aspirations in family firms

Katrin Hussinger and Wunnam Basit Issah

No 25-029, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: We investigate whether family ownership is associated with a preference for patents or trade secrets. Using a sample of S&P 500 firms, we show that family ownership is negatively associated with patenting and positively associated with the usage of trade secrets. We further show that both relationships are moderated by firm performance below the aspiration level, i.e. the performance benchmark level that an organization sets. These results can be explained with a mixed gambles behavioral agency framework. When family firms perform below their aspiration level, prospective financial gains become relatively more important as compared to current socioemotional wealth so that patents become more and trade secrets less attractive.

Keywords: Family firms; patents; trade secrets; mixed gambles; aspiration gap (search for similar items in EconPapers)
JEL-codes: G32 M14 O32 O34 (search for similar items in EconPapers)
Date: 2025
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