Risk aversion, innovation and performance in family firms

ABSTRACT

An analysis of the effect of family governance on the relationships among risk aversion, innovation and performance is the purpose of this study. Beyond the level of risk and innovation, we are interested in analysing the relationship between them and their influence on performance in family firms. Traditionally, risk-seeking has been associated with innovation and performance. Our results confirm both components to be independent and, furthermore, show relationships with opposite signs as expected in the literature. In a sample of 500 firms, the results confirm an idiosyncratic behaviour in family firms; innovation contributes to performance to a higher extent in family firms, and at the same time, risk aversion is positively associated with performance only in non-family firms.

KEYWORDS:

• Innovation
• risk aversion
• performance
• family firm
• socioemotional wealth

JEL CLASSIFICATION:

• L25
• L21
• M10
• O30

Disclosure statement

No potential conflict of interest was reported by the authors.

ORCID

Angel L. Meroño-Cerdán http://orcid.org/0000-0002-6270-2409

Carolina López-Nicolás http://orcid.org/0000-0003-0460-308X

Francisco J. Molina-Castillo http://orcid.org/0000-0002-7803-2104

Additional information

Funding

This work was supported by Fundación Cajamurcia [grant number DOEF 2017].