Family influence and dynamic capabilities in family firms: the moderating effects of knowledge scope and knowledge newness

Purpose The purpose of this study is to examine how family influence affects dynamic capabilities in family firms. This study also aims to analyze whether knowledge scope and knowledge newness serve as moderating factors in this relationship. Design/methodology/approach This study examines the dynamic capabilities of family businesses listed in both the Shanghai and Shenzhen Stock Exchanges from 2009 to 2022. This study identifies businesses belonging to family firms based on family influence. In total, the sample covers 2,934 Chinese family firms accounting for 20,324 firm-year observations. Besides, this study identifies family firms by manually searching for annual reports that reveal the kinship of directors and executives, and other financial variables are collected from the China Stock Market Accounting Research Database. Findings This study empirically reveals that family influence is negatively associated with dynamic capabilities. Moreover, the effect of family influence on dynamic capabilities is weakened with more knowledge scope and knowledge newness. Originality/value The findings contribute to two streams of literature. First, this study extends the theoretical framework of dynamic capabilities from the perspective of socioemotional wealth theory. This study recognizes that family influence is negatively associated with dynamic capabilities. The results offer novel empirical evidence to better understand the dynamic capabilities of family businesses and make it valuable to expand the theoretical framework of dynamic capabilities. Second, this study contributes to the literature in the field of knowledge management. The results provide new findings on the positive moderating role of knowledge management, shedding light on embracing knowledge scope and newness, especially in family businesses with higher level of family engagement.