Exchanging knowledge in the TMT to realize more innovation opportunities: what can family firms do?

Abstract

Purpose This paper aims to examine the influence that family firms’ top management team (TMT) behavior and characteristics exert on their innovation opportunity realization. Design/methodology/approach Data were collected through a survey addressed to a representative sample of Italian firms. The analyzed sample consists of 237 firms, 120 of which are family firms. A series of ordinary least squares models were used to test the four hypotheses. Findings Family firms realize fewer innovation opportunities than non-family firms. This result is fully mediated by the knowledge exchange in the TMT as follows: in family firms, the TMT exchanges less knowledge than in non-family firms, which drives their lower realization of innovation opportunities. In family firms TMT, the increase in the non-family members positively influences the TMT knowledge exchange, but only when the time the Chief Executive Officer (CEO) spends in searching for innovation opportunities outside the firm is low. The more the CEO search increases, the more this positive influence decreases, up to the point it becomes negative. Research limitations/implications The study contributes to the literature on innovation, knowledge management and organizational design in family firms. Nevertheless, data were collected at a single point in time and in a single country. Practical implications The study suggests family firms on how to foster the realization of innovation opportunities. A greater TMT knowledge exchange allows to realize more innovation opportunities and the TMT characteristics emerged as the drivers of this TMT knowledge exchange. As such, family firms should examine the interaction of their TMT composition in terms of non-family and family members with the effort that the CEO deploys to search for innovation opportunities outside the firm. Originality/value Empirical investigation of the link between family ownership, absorptive capacity and innovation performance by considering TMT behavior and characteristics.

Impacts of top management team fault‐line on firm's innovation—Financial slack over‐investment and underinvestment

“…Besides, high TMT fault-line can reduce over-investment as well as alleviate underinvestment and then promote the quantity and quality of firm's innovation. Compared to existing literature that discuss the mediating effects of knowledge (Rondi & Rovelli, 2022), team learning (Wu et al, 2002), and RD (Chen et al, 2018), this paper confirms new influencing mechanism based on perspective of financial management.…”

Guest editorial

“…Rondi and Rovelli (2021) extend the knowledge-based perspective on family firm innovation by showing differences in the level of knowledge exchange as the mechanism that explains family firms’ lower realization of innovation opportunities. Based on a sample of 120 family and 117 non-family Italian firms, the authors demonstrate that in family firms, the TMT shares less knowledge than in nonfamily firms, which drives their lower realization of innovation opportunities.…”

TMT entrepreneurial passion diversity and firm innovation performance: the mediating role of knowledge creation

“…Smith et al (2005) demonstrate that the introduction rate of new products and services is a function of the ability of organization members to exchange and combine knowledge (Smith et al , 2005). Rondi and Rovelli (2021) suggest that knowledge exchange in TMTs is a critical mechanism of knowledge management for firms in realizing innovation opportunities and innovation performance improvement (Rondi and Rovelli, 2021). Ruiz-Jiménez et al (2016) find that knowledge combination is critical for firms to achieve creative solutions and improve the effectiveness of innovation.…”