Tracing the Roots of Innovativeness in Family SMEs: The Effect of Family Functionality and Socioemotional Wealth

Abstract

By integrating literature on family functionality, family firms, and socioemotional wealth (SEW), we develop a theoretical model explaining how family functionality and SEW dimensions influence firm innovativeness. Our multigroup structural equation model on two samples of family small and medium‐sized enterprises (SMEs) shows that family functionality is positively linked to SEW, whereas divergences emerge on the effect of different SEW dimensions on innovativeness. Binding social ties, the emotional attachment of family members to the firm, and the renewal of family bonds through intrafamily succession positively affect family SME innovativeness, while identification of family members with the firm has a negative effect. By deepening current understanding of the role and functionality of controlling families as determinants of their propensity to preserve SEW and achieve innovativeness, our findings offer important implications for theory and practice, paving the way for future research on SEW and family firm innovation.

Family firms in the global economy: Toward a deeper understanding of internationalization determinants, processes, and outcomes

“…Pioneering studies highlight the relevance of family structures (Aldrich & Cliff, 2003) and the family system (Olson et al, 2003) to understand family firm behavior and outcomes, and a recent study shows the implications of family functionality for family business innovativeness (Filser, De Massis, Gast, Kraus, & Niemand, 2017). However, we still lack a comprehensive overview linking the main family science theories and relevant dimensions of family heterogeneity to enable understanding the influence of family involvement (Jaskiewicz & Dyer, 2017), which may help us theorize how such involvement exercises its effect on family business behaviors and outcomes through a direct effect on the family's behavioral propensities.…”

Tracing the Roots of Constructive Conflict Management in Family Firms

“…The influence of family functionality in family firm performance is partially mediated by the effect of shared vision and role clarity. Danes and Morgan (2004); Gudmunson and Danes (2013); Neff (2015); Filser et al (2018).…”

“…Levels of family functionality (Danes & Morgan, 2004;Filser, De Massis, Gast, Kraus, & Niemand, 2018) can be also considered as evidence of the relational dimension. Family functionality is important in shaping family members' goals and behaviors (Filser et al, 2018).…”

“…The relational resources of altruism (Eddleston & Kellermanns, ), trust (Eddleston & Morgan, ; Sundaramurthy, ), and fairness perception (Heyden et al., ) are characteristics of a collaborative family business. Levels of family functionality (Danes & Morgan, ; Filser, De Massis, Gast, Kraus, & Niemand, ) can be also considered as evidence of the relational dimension. Family functionality is important in shaping family members’ goals and behaviors (Filser et al., ).…”

Socioemotional Wealth and Innovativeness in Small- and Medium-Sized Family Enterprises: A Configuration Approach

“…Research on innovation in small‐ and medium‐sized family enterprises (family SMEs) is growing rapidly, seeking to determine how family ownership affects innovation inputs as well as innovation outputs (Block et al ; Carnes and Ireland ; Filser, De Massis, Gast, Kraus, Niemand ; Kassicieh et al ; Kotlar et al ). Yet existing studies report inconsistent findings when it comes to the effect of family ownership on innovation (De Massis et al ).…”