Responding to Digital Transformation by External Corporate Venturing: An Enterprising Family Identity and Communication Patterns Perspective

Abstract

Digital transformation increasingly requires activities located outside firm boundaries, for example via alliances with start‐up companies. Despite this, German Mittelstand firms, primarily owned and managed by enterprising families and seen as role models of innovation, appear reluctant to place strategic emphasis on venturing outside the firm’s boundaries when it comes to digital transformation. Drawing on the concepts of identity and communication patterns, we theorize on the mechanisms behind this behaviour. Applying structural equation modelling to a sample of 254 members of the next generation in enterprising families from Germany, we find that family communication patterns impact the strategic priority for or against external corporate venturing via identity‐related considerations.

Corporate Entrepreneurship and Family Business: Learning Across Domains

“…One article touches on the early stages of CE, that is, opportunity exploitation (De Massis et al, 2021). Three of the articles focus on specific CE strategies: two articles study ECV and aim to investigate its triggers and approaches in a family firm context (Ramírez‐Pasillas et al, 2021; Prügl and Spitzley, 2021). A third article focuses on the differences between family and non‐family firms in terms of franchising (Chirico et al, 2021).…”

“…Prügl and Spitzley (2021) investigate the ECV behaviour of family firms. These authors, however, are interested in revealing and understanding heterogeneity among family firms.…”

“…Due to such independence, this case would not formally fall under any of the classic CE cases; however, it does represent the case of individuals creating a new organization in association with an existing organization (in line with Sharma and Chrisman, 1999). In fact, Prügl and Spitzley (2021) consider those cases where only the parent family firm is the locus of idea generation and a source of relationships that are important to the new venture as cases of ECV. We suggest that this type of new venture deserves a distinct label; we suggest applying the label ‘family venturing’ or ‘family CV’ to those venturing initiatives that (albeit independent) largely draw on the resources of the enterprising family (which includes the mother company and all other possible businesses) and offer strategic benefits in return where the family is the layer that bridges the two organizations.…”

“…Some of these contributions might be implicitly embedded within original CE (Kuratko, 2017); for example, resources (such as knowledge and human capital), albeit distinctive in family firms due to being family imbued (Chirico et al, 2021), are already included among CE organizational antecedents. Likewise, the organizational design arrangements illustrated by De Massis et al (2021), which are fundamental to opportunity exploitation, and the communication patterns leading to ECV (Prügl and Spitzley, 2021) belong to the supporting organizational structure elements of the original CE framework. Other family firm‐specific factors depicted in Figure 2 are quite under‐researched and should be investigated as triggers or enablers of the CE process.…”

“…Moving towards the left‐hand side of the model, the CE original framework focuses on external transformation triggers, which family firms are particularly susceptible (see industry‐embedded values and norms; Mazzelli et al, 2018) or reactive to (see technological discontinuities; König et al, 2013). The digital transformation (Prügl and Spitzley, 2021) and recent pandemic (De Massis and Rondi, 2020; Foss, 2020) serve as further recent examples of the stimulation of CE in family firms. However, the mere focus on external transformation triggers appears to be an unnecessary limitation, at least (but especially) for the case of family firms.…”