Innovation in Family Firms: An Intergenerational Tale of Symbol and Substance

Abstract While the innovation behaviors of family firms (FFs) have attracted burgeoning scholarly attention, few studies have investigated how intergenerational succession, one of the most critical aspects of family dynamics changes among FFs, affects innovation behaviors. Based on the socioemotional wealth perspective (SEW), we have introduced a concept of innovation decoupling that refers to the tendency of prioritizing the symbolic disclosures over substantive changes of innovation and proposed that FFs that have experienced intergenerational succession would exhibit a greater extent of innovation decoupling. By tracking a sample of Chinese publicly listed FFs from 2012 to 2021 while applying the machine learning approach, we have confirmed the proposition and further unveiled that such inclination becomes weaker when the focal FF is influenced by the family affective endowment and the successor with ascribed bureaucratic connections. Overall, this study brings new nuances to the knowledge of the innovation behaviors of FFs by highlighting the inter-firm heterogeneities and impacts of family dynamics.