Innovativeness and family-firm performance: The moderating effect of family commitment

The positive relationship between innovativeness and firm performance is well established and applies equally to all businesses, including family firms. However, little is yet known about how the unique characteristics of family firms influence this relationship. Drawing upon the resource-based view (RBV) of the firm, this study explains how the interplay between innovativeness as a firm-specific resource and family commitment as a family-specific resource affects performance. The analysis of longitudinal survey data collected from Finnish family firms demonstrates a curvilinear (U-shaped) moderating effect of the owner family’s commitment to the firm, in that the impact of innovativeness on firm performance is strongest when family commitment is either low or high. This implies that owner families should avoid their level of commitment becoming becalmed between high and low if they wish to convert their firm’s innovativeness into performance.