The influence of socioemotional wealth and organisational learning on innovation performance in family firms

Thomas Moser

doi:10.25907/00971

Amid the relentless pace of technological change, Industry 5.0 imperatives and global economic volatility, family firms are under increasing pressure to innovate to ensure long-term viability. This challenge is particularly pronounced in Germany, where over 90% of manufacturing firms are family owned. For these multi-generational firms, sustaining their innovation performance while maintaining Enkeltauglichkeit, the capacity to remain viable and flourish for future generations, is critically important. The literature recognises this imperative as socioemotional wealth (SEW), the nonfinancial value derived from family control, identity and legacy goals, fundamentally shapes these firms’ decisions. Achieving long-term viability requires reconciling SEW preservation with the dynamic capabilities (DCs) and organisational learning (OL) to realise innovation performance. However, existing scholarship offered a fragmented understanding of how SEW dimensions influence these capabilities, often portraying SEW as primarily fostering conservatism and risk aversion. Chapter 3 addresses the fragmented understanding of organisational learning (OL) in family firms through a systematic literature review. The analysis of 53 articles established key research gaps by showing that OL is often treated as a unidimensional construct and that family firm-specific theories, such SEW, are significantly underutilised. This provides the foundation for the subsequent empirical investigation into the influence of SEW on the capabilities required for innovation performance. This thesis empirically investigates the influence of SEW on family firms’ innovation performance. It is structured around two interrelated empirical studies, grounded theoretically in DCs theory and behavioural agency theory (BAT). Survey data were collected from N = 335 German medium-sized family firms in manufacturing and construction. Both studies utilise partial least squares structural equation modelling for complex path models and moderated mediation analysis via the Hayes PROCESS macro for SPSS. The first study examined the mediating roles of DCs and OL in the SEW-innovation performance relationship. The second study analysed how unique family firm characteristics - specifically generational ownership - and the presence of advisory boards shape this relationship, with SEW dimensions acting as key mediators. The empirical findings revealed that SEW can positively, albeit indirectly, influence innovation performance. This effect is complex and contingent upon family firm characteristics such as generational ownership and structural mechanisms, including advisory boards. Chapter 5 draws on DCs theory and finds that SEW dimensions exert a positive indirect influence on innovation performance, challenging the widely held view that family firms’ prioritisation of SEW inherently fosters innovation-averse conservatism. This influence operates robustly through a serial mediation pathway: SEW fosters the development of DCs, which subsequently enables enhanced OL, driving superior innovation performance. Chapter 6 draws on BAT and finds that unique family firm characteristics, specifically generational ownership, and the presence of advisory boards, critically influence innovation performance. Managed family firms and professionally managed family firms exhibited significantly higher innovation performance than founder-led firms. Emotional attachment was a significant mediating SEW dimension, with its effect varying by generational ownership stage and the presence of advisory boards. Advisory boards moderated the generation, emotional attachment, and innovation performance link but displayed a direct negative main effect on innovation performance, suggesting their traditional oversight focus may inadvertently stifle innovation performance if not balanced with an innovation-support mandate. Theoretically, this research substantiates SEW’s potential as a strategic resource for achieving Enkeltauglichkeit, contingent on effective capability development (DCs and OL) and unique family characteristics (generational ownership and advisory board presence). Drawing from the DCs perspective (Chapter 5), it elucidates a specific sequential capability chain linking SEW to innovation performance. Further, from a BAT perspective (Chapter 6), it advances BAT by demonstrating how generational ownership shifts influence risk preferences via emotional attachment’s mediating role and how advisory boards interact with these dynamics. The findings have practical implications for family firms by guiding them to manage SEW dimensions and fostering emotional commitment while actively cultivating DCs and OL. It highlights the necessity of tailoring advisory boards, specifically their implementation, composition and mandate, which should be customised to the firm’s specific generational ownership stage and SEW profile to optimise their impact on innovation performance. This ensures that advisory boards possess innovationfocused expertise appropriate to the firm’s generational ownership stage and achieving Enkeltauglichkeit. Future research directions include longitudinal analyses to capture temporal dynamics of SEW and capability development (DCs and OL); comparative studies across diverse contexts (e.g., industries, advisory structures) to assess generalisability; and deeper investigation into mechanisms, such as the influence of SEW and generational ownership on different types of innovation (e.g., incremental versus radical) and capability development processes.

The influence of socioemotional wealth and organisational learning on innovation performance in family firms

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