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External knowledge sourcing and innovation in family firms: How and why absorptive capacity and family social capital matter

Manzoor Ul Akram (Department of Marketing and Strategy, Indian Institute of Management, Rohtak, India)
Koustab Ghosh (Department of Organizational Behavior and HRM, Indian Institute of Management, Rohtak, India)
Rojers P. Joseph (Department of Marketing and Strategy, Indian Institute of Management, Rohtak, India)

VINE Journal of Information and Knowledge Management Systems

ISSN: 2059-5891

Article publication date: 20 April 2020

Issue publication date: 31 May 2021

396

Abstract

Purpose

This study aims to investigate the external knowledge search behaviors in terms of search breadth and search depth in family firms and the resultant product innovation in Indian context. The authors theorize the mediating role of absorptive capacity (potential and realized absorptive capacity) between knowledge sourcing from external sources and product innovation. Further, the authors examine the moderating role of crucial internal social capital of the family firm in enhancing the use of external knowledge for firm innovation activities.

Design/methodology/approach

The study uses a quantitative research design taking single informant for collection of data from 151 family small and medium enterprises in automotive sector in India. The authors use structural equation modeling to test hypothesized relationships.

Findings

The findings indicate that both search breadth and search depth of family firms are positively associated with product innovation in family firms. The authors also find evidence for partial mediating role of potential and realized absorptive capacity in the relationship between search breadth and innovation and search depth and innovation. The results show how family firms learning taking place while scanning external knowledge sources in terms of external absorptive capacity routines. Finally, the authors find that family firm internal social capital positively moderate the relationship between search breadth and depth, and product innovation.

Practical implications

Family firms need to innovate to remain relevant in the long-run and as such development of superior capabilities is of great significance to them. Family firm managers must be open to external knowledge as such knowledge help them improve the firm level of innovation through absorptive capacity. Further, family firms must realize and act upon the importance of their social capital for the integration and utilization of acquired knowledge.

Originality/value

This paper is amongst a few papers that take dynamic capability views of innovation in family firms wherein the authors theorize how external search breadth and depth lead to the development of potential and realized absorptive capacity in family firms. The importance of family firm internal social capital as a strong integrating and knowledge sharing mechanism that helps family firms transform external knowledge into innovation is also highlighted.

Keywords

Acknowledgements

The authors acknowledge the editor, associate editor and two anonymous reviewers for the feedback and guidance.

Citation

Akram, M.U., Ghosh, K. and Joseph, R.P. (2021), "External knowledge sourcing and innovation in family firms: How and why absorptive capacity and family social capital matter", VINE Journal of Information and Knowledge Management Systems, Vol. 51 No. 3, pp. 438-460. https://doi.org/10.1108/VJIKMS-09-2019-0143

Publisher

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Emerald Publishing Limited

Copyright © 2020, Emerald Publishing Limited

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