Exchanging knowledge in the TMT to realize more innovation opportunities: what can family firms do?

Purpose: This paper aims to examine the influence that family firms’ top management team (TMT) behavior and characteristics exert on their innovation opportunity realization. Design/methodology/approach: Data were collected through a survey addressed to a representative sample of Italian firms. The analyzed sample consists of 237 firms, 120 of which are family firms. A series of ordinary least squares models were used to test the four hypotheses. Findings: Family firms realize fewer innovation opportunities than non-family firms. This result is fully mediated by the knowledge exchange in the TMT as follows: in family firms, the TMT exchanges less knowledge than in non-family firms, which drives their lower realization of innovation opportunities. In family firms TMT, the increase in the non-family members positively influences the TMT knowledge exchange, but only when the time the Chief Executive Officer (CEO) spends in searching for innovation opportunities outside the firm is low. The more the CEO search increases, the more this positive influence decreases, up to the point it becomes negative. Research limitations/implications: The study contributes to the literature on innovation, knowledge management and organizational design in family firms. Nevertheless, data were collected at a single point in time and in a single country. Practical implications: The study suggests family firms on how to foster the realization of innovation opportunities. A greater TMT knowledge exchange allows to realize more innovation opportunities and the TMT characteristics emerged as the drivers of this TMT knowledge exchange. As such, family firms should examine the interaction of their TMT composition in terms of non-family and family members with the effort that the CEO deploys to search for innovation opportunities outside the firm. Originality/value: Empirical investigation of the link between family ownership, absorptive capacity and innovation performance by considering TMT behavior and characteristics.