Family firm heterogeneity and innovation: The role of firm origin and family involvement

Summary

Article Date: 16 Jun 2025
Article URL: https://www.tandfonline.com/doi/full/10.1080/00472778.2025.2510478?af=R
Article Image: https://www.tandfonline.com/action/showCoverImage?journalCode=ujbm20

This study examines how the origin of family firms—whether “born” family firms or those formed via privatisation of state-owned enterprises (SOE-transformed)—affects innovation investment and efficiency in emerging economies. Using institutional logics theory, the authors argue that SOE-transformed family firms face conflicting state-socialist and market logics, which leads them to invest less in innovation but to use whatever they invest more efficiently. However, when family involvement in management is high, this efficiency advantage weakens because family logic introduces further internal conflict. The analysis draws on data from 1,755 Chinese listed family firms across 2009–2019 and finds support for these hypotheses.

Key Points

Firm origin matters: SOE-transformed family firms and born family firms display different innovation behaviours.
SOE-transformed family firms tend to invest less in R&D but convert investment into innovation outcomes more efficiently than born family firms.
High family involvement in management reduces the efficiency advantage of SOE-transformed firms by adding competing family-centred logic.
Institutional logics (state/socialist vs market vs family) explain within-family-firm heterogeneity in innovation decisions.
Empirical evidence comes from a large sample of 1,755 Chinese listed family firms over 2009–2019, strengthening claims for emerging-market contexts.

Content Summary

The paper frames family-firm heterogeneity through the lens of institutional logics, emphasising that origin-induced legacies (state vs private founding) shape strategic choices. SOE-transformed family firms inherit state-oriented practices that clash with market pressures; this complexity reduces their willingness to commit high absolute levels of innovation spending. Yet, constrained budgets appear to be used more effectively, yielding better innovation efficiency per unit of investment compared with born family firms.

Importantly, family involvement in management functions as a moderator. Where family members take central managerial roles, their interests and priorities introduce a third logic that can intensify internal contradictions, eroding the efficiency advantages SOE-transformed firms otherwise display. The authors test these relationships with panel data on Chinese listed family firms and report results consistent with the theoretical predictions.

Context and Relevance

This research is relevant to scholars and practitioners interested in family business governance, privatisation legacies, and innovation policy in emerging markets. It highlights that not all family firms should be treated uniformly: origin and governance configuration materially affect innovation strategy and outcomes. For policymakers, the findings point to nuanced effects of privatisation on firm capabilities and innovation trajectories. For family business owners and advisers, the study underscores the trade-offs between family control and innovation efficiency.

Why should I read this?

Short version: if you care about how the past (state roots) and who runs the firm (family managers) change its appetite and skill for innovation, this paper saves you time by spelling out the trade-offs and backing them with a big dataset from China. Nice if you’re into family firms, privatisation effects or innovation strategy.

Author’s take (punchy)

Punchy and practical: this paper doesn’t just say family firms are different — it shows why the origin story and family involvement actually shift investment behaviour and outcomes. If you work with family firms or study firm transformation after privatisation, dig into the methods and results — they matter.

Source

Source: https://www.tandfonline.com/doi/full/10.1080/00472778.2025.2510478?af=R