How does family management affect innovation investment propensity? The key role of innovation impulses

Abstract

We investigate the relationship between family management and innovation investment propensity in family firms through analyzing the effect of two innovation impulses: demand-pull and technology-push. Extending the technology-push/demand-pull framework to the context of family firms, and adopting a direct measure of firms’ innovation investment propensity, we test our hypotheses on a sample of 1093 Italian small and medium-sized family firms. Our results show that both the demand-pull and technology-push innovation impulses moderate the relationship between family management and the firms’ propensity to invest in innovation, reducing the negative effect exerted by family management on family firms’ innovation investment propensity. Moreover, our evidence shows that family firms’ innovation investments are more sensitive to the demand-pull than the technology-push impulse. Overall, our findings suggest to practitioners and policymakers that family firm innovation impulses are important contingencies that need to be taken into account when making innovation investment decisions.