Absorptive capacity in family firms: exploring the role of the CEO

Abstract

Purpose: Absorptive capacity (AC), the ability to leverage external knowledge for innovation, helps explain the mixed findings on family firms' innovation performance. Our research focuses on the CEO's role - whether family or non-family, and founding or later generation - in influencing AC. We also explore how firm size and environmental dynamism affect these relationships, offering insights into varying AC levels among family firms. Design/methodology/approach: OLS regression models were estimated to test the hypotheses using a sample of 364 family firms in Spain. Findings: Family firms¿ absorptive capacity is greater when the CEO is a family member, and even more so when the family CEO belongs to the founding family generation. While AC diminishes in larger family firms this effect is mitigated when the CEO is a family member. The predicted moderating effect of environmental dynamisms is not supported by the analyses. Originality: This paper adds insights about the drivers of heterogeneity in innovation among family firms, addressing recent calls for more nuanced views of how family members drive the strategic behavior of the business, and incorporating considerations of different types of family firms based on the identity of the firm CEO. The results overall support the theoretical claims, but also open up important questions for future studies.