Prior research has revealed a negative association between family influence and R&D spending. The dominant explanation for this association centers on the role of socioemotional considerations in decision-making. These socioemotional decision considerations are argued to play a more prominent role among family firms and to lower their R&D spending intensity. However, to date, this negative explanatory mechanism has not been empirically verified. Moreover, a deeper analysis of the literature suggests that some family-induced socioemotional considerations may actually stimulate R&D investments. In this study, four socioemotional decision considerations are delineated-namely, concern for current control, for extended preservation, for organizational reputation, and for organizational values and traditions-of which the first two are anchored in a family's nurturer role identity and the latter two in a family's organizational identification. It is hypothesized that those socioemotional considerations derived from a family's nurturer role identity constrain R&D spending, while those derived from the family's organizational identification boost R&D spending. The empirical study concentrates on the setting of privately held manufacturing SMEs, and using survey data on 365 such companies in the Netherlands, a structural equation model is estimated. The analyses reveal several interesting results: (1) the overall association between family firm status and R&D spending indeed turns out to be negative, and this negative effect is fully explained by family firms' preoccupation with extended preservation; (2) concerns for organizational reputation and for organizational values and traditions partly compensate the negative effect of the extended preservation mechanism. Key academic and practical implications of these findings are discussed. Practitioner PointsFamily-owned SMEs on average invest less in R&D than nonfamily SMEs.The greater concern of owning-families for the extended preservation of their firm largely explains these lower investments in R&D. On the other hand, family owners' greater concern for organizational reputation, as well as for organizational values and traditions provides some incentive towards an increase of R&D spending.Firm decision-makers and advisors, as well as policy makers, should thus be aware that family-induced socioemotional considerations represent a doubleedged sword in relation to R&D spending decisions.Rather than trying to suppress such socioemotional considerations without discrimination, from an R&D perspective some of these considerations should be carefully monitored whilst others can be nurtured and stimulated.

This study investigates how family and nonfamily firms learn. Specifically, it asks whether family influence fosters or hinders the transformation of the potential absorptive capacity augmented by research and development (R&D) into the realized absorptive capacity embodied by innovation outcomes. The conceptual model posits that family influence will enhance the absorptive capacity performance of R&D regarding exploitative innovations that tend to result from deep external search yet diminish the absorptive capacity performance of R&D regarding exploratory innovations that tend to result from broad external search. Regression analyses using a sample of 346 Dutch manufacturing small and medium-sized enterprises largely support the hypothesized model.

Firms are more prone to allocate their resources to research and development (R&D) when they are confident about their ability to appropriate the value created through these activities. In this regard, policymakers introduce formal intellectual property rights (IPR) institutions to create an innovation-friendly environment. Less formalized shared values and norms are however likely to affect the extent to which organizations depend on the strength of formal institutions in determining their R&D strategy. Embracing an institution-based perspective on firm-level strategic decision-making, we examine whether the degree to which a firm relies on strong formal IPR institutions in R&D decisions depends on the configuration of informal institutions in its environment, including family and societal culture. We test our hypotheses on a representative sample of privately-held European manufacturing firms and find that the family institution can play an “institutional void filling” role through involvement in ownership and management. This is particularly the case when the firm is embedded in a collectivist culture coherent with the family’s values and norms imbued in the business. Our study offers contributions to the institution-based view, innovation, and family business literatures.

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