What drives corporate venturing strategic decisions in family firms? Insights from real options and behavioral theory of the firm

The aim of this study is to investigate whether family control affects corporate entrepreneurship and to what extent slack resources and performance hazard, as contingencies, moderate that relationship. We distinguish between corporate venturing (investment) and strategic renewal (divestment) and, by integrating arguments from the socioemotional wealth approach, the behavioral agency model, and the corporate entrepreneurship literature, we build a framework predicting the likelihood of investment and divestment in family versus non-family firms. The hypotheses are tested on panel data of 164 German listed firms in the timeframe 2007-2016. Contrary to our expectation, our findings suggest that family firms have a higher propensity towards investments than their non-family counterpart, thus suggesting that corporate venturing initiatives represent a real option for family firms that benefit from the flexibility investments provide to avoid SEW losses. Slack attenuates the positive impact of family control on the likelihood of investments, as behavioral agency model suggests.