Does Knowing “Who Knows What” Matter for Family Firm Innovation? Insights From Transactive Memory System Theory

Abstract

We extend transactive memory systems theory from psychology to examine the cognitive interdependence of family and nonfamily employees and its effects on family firm innovation. Using triadic data and dispersion modeling, we find that innovation is enhanced when family and nonfamily employees communicate and when they have a shared understanding of “who knows what”; however, we find unexpectedly that the communication effects differ for family and nonfamily employees, hindering the development of shared knowledge perceptions needed for enhanced innovation. We demonstrate the value in applying psychology-based research to family firm investigations and in investigating microfoundations of family firm innovation.

The Psychological Foundations of Management in Family Firms: Emotions, Memories, and Experiences

“…The third paper in this special issue draws attention to the family’s role in shared stories (as a part of their memories), construing reality, and developing lines of reasoning. Indeed, Madison, Daspit, and Marett (2020) corroborate the notion that shared stories among family members impact the cognitive schema associated with the firm’s innovation, affirming that, “shared knowledge perceptions among family and nonfamily employees positively affect the family firm’s outcome of innovation” (p. 14).…”

WANTED—Theoretical Contributions: An Editorial on the Pitfalls and Pathways in Family Business Research

“…While they expectedly find that family firm innovation is enhanced when family and nonfamily employees communicate and have a shared understanding of "who knows what," these authors unexpectedly find that the communication effects for family and nonfamily employees differ, which ultimately hampers innovation in family firms. Thus, Madison et al (2021) find that the TMS processes differ across family and nonfamily firms, which is a theoretical contribution to both the family business and psychology literatures.…”

“…Example of a Successful Theoretical Contribution. A good example of an article that uses the context of family businesses to provide a valuable theoretical contribution is the study by Madison et al (2021) as these authors leverage transaction memory systems (TMS) from the psychology literature. While they expectedly find that family firm innovation is enhanced when family and nonfamily employees communicate and have a shared understanding of "who knows what," these authors unexpectedly find that the communication effects for family and nonfamily employees differ, which ultimately hampers innovation in family firms.…”

Unraveling the Role of Shared Vision and Trust in Constructive Conflict Management of Family Firms. An Empirical Study From a Mixed Methods Approach

“…Our findings suggest that the diverse approaches used to allocating resources (risk orientation) require to undertake conflict management processes at different levels of the organization (Borbély and Caputo, 2017 ; e.g., managing committee and board of directors). At the same time, shared vision is a driver to achieve innovativeness (Neff, 2015 ) and represents a collective cognition between family and non-family members (Madison et al, 2020 ).…”

“…Some works highlight the positive influence of shared vision on innovation through having a good impact on collaboration (Bigliardi and Galati, 2018 ), new product development (Cassia et al, 2012 ), and strategic flexibility (Craig et al, 2014 ). A shared vision as a collective cognition between family and non-family members would enhance innovation (Madison et al, 2020 ). A relevant issue to address in this research is to refine our understanding about the relationship between shared vision, trust and constructive conflict management in the context of family firms.…”