Navigating family control: U-shaped effects on innovativeness and performance, moderated by firm age and breadth of collaboration partners

Purpose This study aims to examine how and when family control influences the innovativeness and performance of family small and medium enterprises (SMEs). Leveraging agency theory, it also theorises the conditional role of firm age and the breadth of collaboration partners. Design/methodology/approach The study is based on panel data from 622 family SMEs obtained from the Spanish innovation survey covering the period from 2010 to 2014. The data were analysed using generalised structural equation modelling (GSEM), with moderated mediation analysis and bootstrapping involving 5,000 replications at a 95% confidence interval. Findings The findings confirm a U-shaped relationship between family control and innovativeness. Additionally, innovativeness partially mediates the effect of family control on performance. This indirect effect is moderated by firm age and breadth of collaboration partners, becoming steeper for mature family SMEs with diverse external collaborations. Practical implications This research highlights the need for SMEs to tailor their governance structures. Solely family or non-family governance may be advantageous, depending on the firm's developmental stage, with the benefits of homogenous governance being more evident in older firms with well-developed governance mechanisms. Originality/value This study demonstrates that family SMEs can harness innovativeness as they mature and engage with external collaboration partners, provided they reach a critical threshold of family control. Authoritarian governance by family members mitigates agency issues, enhancing innovativeness and performance.