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Family ownership and R&D investment: the moderating role of banks and private equity

Alessandro Cirillo (Department of Economics, Università degli Studi di Foggia, Foggia, Italy)
Mario Ossorio (Department of Economics, Università degli Studi della Campania Luigi Vanvitelli, Capua, Italy)
Luca Pennacchio (Department of Business and Economics, Università degli Studi di Napoli Parthenope, Napoli, Italy)

Management Decision

ISSN: 0025-1747

Article publication date: 13 November 2018

Issue publication date: 5 July 2019




The purpose of this paper is to contribute to innovation and family business literature by establishing whether institutional involvement of private equity (PE) and banks in family firms moderates the relationship between family ownership and research and development (R&D) investment.


This paper used the socio-emotional wealth lens to carry out an econometric analysis on a large sample of Italian non-listed family firms. Using the sample selection model meant it was possible to account for potential selection bias arising from firms’ discretionary disclosure of R&D expenditure.


Family involvement in ownership reduced firms’ R&D intensity. When PE investors also held shares, the negative relationship was diverted. Bank involvement, however, did not have a significant effect on the relationship.

Research limitations/implications

This paper enriches the innovation management literature by increasing the understanding of the determinants of R&D investments in family firms. The results support the view that non-financial priorities in family firms are contingent upon non-family shareholders. This enriches the debate about the heterogeneity of family businesses and is consistent with the socio-emotional wealth framework, which has shown that risk preferences may vary if desired and actual performances are different. This may be a fruitful area for future research.


Contradicting the assumption that institutional owners all share the same perspective, this study is the first to assess the impact of different institutional shareholders on R&D intensity of private family firms.



Cirillo, A., Ossorio, M. and Pennacchio, L. (2019), "Family ownership and R&D investment: the moderating role of banks and private equity", Management Decision, Vol. 57 No. 7, pp. 1675-1694.



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