Organisations’ Resources and External Shocks: Exploring Digital Innovation in Family Firms

Abstract

Few external shocks have had as severe an impact on organisations as COVID-19. To date, research on how management can respond to such a trigger event is lacking. Due to their economic relevance, family firms, which are typically resource-constrained and rely on idiosyncratic resource allocation behaviour, are of particular interest in this regard. Based on a multicase study of German family firms and building on longitudinal insights from 112 semistructured interviews, we develop a framework explaining how an external shock such as the COVID-19 pandemic can trigger a change in family firms’ motives. Linking adapted motives of family firms (i.e. survival, utilisation, and opportunism) with their resource allocation behaviour during the crisis (in terms of resource preservation, resource recombination, and social boundary resource development), we reveal how digital innovation (digital process innovation, digital product innovation, and digital business model innovation) originates as a result of a process of entrepreneurial action.