Family Owners’ Fear of Loss Emotions on Socio-Emotional Dimensions and their Effects on Firm Innovativeness

By integrating literature on behavioral agency theory and fear as an emotional lens, we develop a theoretical framework explaining how family owners’ fear of losing specific dimensions of socio-emotional endowments influence family firm innovativeness. Our analysis of data from a two-phased, multi-respondent, matched survey (n = 407) at two different time points from family SMEs (n = 207) in manufacturing industries in Chongqing, China, shows that socio-emotional preferences, and the fear attached to losing specific endowments, activate or constrain innovativeness. Family owners’ fear of losing family control and influence increases firm innovativeness, as do family owners’ fear of losing guanxi (social bonds). However, family owners’ fear of losing identification with the business among family members decreases firm innovativeness, as do family owners’ fear of being unable to renew family bonds. By deepening current understanding of the role and functioning of emotions held about specific socio-emotional dimensions as determinants of firm innovativeness, our findings offer important implications for theory and practice, correcting for the inattention to sentiments and emotional preferences family owners may or may not have towards specific socio-emotional dimensions in their strategic choices.