CEO's temporal focus and business model innovation in family firms under environmental dynamism

Business model innovation (BMI) is critical for firms’ long-term survival under environmental dynamism and depends heavily on CEOs’ cognition. While Socioemotional Wealth (SEW) explains why family CEOs may resist or engage in BMI, it largely assumes homogeneous responses under similar environmental conditions. Upper echelons theory (UET), in turn, emphasizes CEOs’ temporal focus (i.e., attention to the past, present, or future) as a key driver of strategic actions, yet it implicitly assumes financial value maximization and overlooks family CEOs’ concern for preserving SEW. Consequently, how family CEOs’ temporal focus shapes BMI, and how these effects vary across environmental conditions, remains insufficiently understood. Integrating UET and SEW, we theorize that temporal focus functions as a cognitive mechanism shaping both when (current vs. prospective) and how SEW is preserved. We apply PLS-SEM to analyze survey data and annual reports from 100 Pakistani family firms. Our findings reveal that past-focused family CEOs consistently resist BMI, present-focused family CEOs engage in BMI only under conditions of environmental dynamism, and future-focused family CEOs promote BMI under stable conditions but retreat from BMI under dynamism. Our study makes two core contributions. First, we show that family influence is not monolithic but cognitively filtered through CEOs’ temporal focus, thereby providing a micro-foundation for heterogeneity in family firms’ BMI behavior. Second, we extend SEW theory by demonstrating that SEW preservation is temporally contingent rather than uniform, thereby identifying important boundary conditions for arguments suggesting that long-term orientation and forward-looking SEW universally foster BMI. We also derive practical implications for family business leaders navigating dynamic environments.