Familiness and R&D investments

Abstract

Purpose

The purpose of this study is to investigate R&D investments in family firms.

Design/methodology/approach

The socio-emotional wealth (SEW) perspective, considered as a dominant paradigm in the family business field, is the theoretical framework used to report different behaviors ascertained within family firms. This paper focuses on two dimensions of the SEW, namely, family control and influence and family identity. A suspected moderating role played by the firm’s life cycle stage on the dimensions is also investigated using panel data. To analyze the results, this paper uses the Smart PLS software on secondary data collected for 76 German family firms.

Findings

The empirical results reveal a negative influence of SEW on R&D investments. The prominent effect of the family control and influence dimension on R&D is higher in the first part of a firm life cycle.

Research limitations/implications

The analysis of this study is subject to several caveats. First, to measure the R&D investment, this paper used R&D intensity computed as the total annual R&D expenses by total sales. Except for the fact that the use of proxies received several criticizes from scholars (Berrone et al., 2012) claiming how they do not directly relate to the essence of the dimensions measured. Second, this paper used two out of five FIBER dimensions only in the study. This paper took the right direction, but still, the complexity of SEW may not be fully captured following this approach (Berrone et al., 2012).

Originality/value

This study could be considered as an important extension of prior research investigating R&D in family firms. The authors provide a valid empirical construct, the FIBER scale, to capture non-monotonic behaviors in family firms and an enlargement of the family firms and innovation management field of research.

Citation

Damak, S., Ben Mbarek, H. and Haj-Salem, I. (2022), "Familiness and R&D investments", Journal of Financial Reporting and Accounting, Vol. 20 No. 1, pp. 161-184. https://doi.org/10.1108/JFRA-06-2020-0179