Influence of socioemotional wealth on non-family managers’ risk taking and product innovation in family businesses

Purpose: There is a growing interest in understanding family firms’ strategic behavior using the socioemotional wealth perspective. This study explores how family socioemotional wealth (SEW) dimensions influence non-family managers’ attitudes toward risk in the context of product innovation. We also examine whether managerial risk-taking mediates the relationship between SEW and product innovation.

Design/methodology/approach: The study uses a sample of 150 family firms in the United Arab Emirates and collects data from family owners and non-family managers via self-administered questionnaires. We use SmartPLS structural equation modeling to test the conceptual model and the proposed hypotheses.

Findings: The results indicate that SEW influences non-family managers’ risk-taking behavior in different magnitudes and directions, thus impacting firms’ product innovation. Moreover, risk-taking partially mediates the relationship between SEW dimensions and product innovation.

Originality/value: While product innovation could be seen as a loss scenario for family firms due to the potential loss of SEW, growth, continuity, and reputation outweighed the desire to maintain control for the firms in this sample. Thus, these firms encourage non-family managers to take risks in product innovation.