Growth implications of creation and discovery behavior among family firms : the moderating role of venture age

Abstract

PURPOSE : The aim of the study is to examine the effects of opportunity creation and discovery on the performance of family firms. Specifically, from the tenets of dynamic capabilities and organizational contingency perspectives, this study proposes and tests a framework of how family firms' creation and discovery behavior impact venture growth and the conditions under which such impact can vary.

DESIGN/METHODOLOGY/APPROACH : The study uses moderated-hierarchical regression to analyze survey data from 156 family-owned small and medium-sized enterprises (SMEs) operating within a sub-Saharan African economy.

FINDINGS : The findings indicate that creation behavior has a curvilinear U-shaped relationship with venture growth, while discovery behavior has a direct positive relationship with venture growth. Further analysis reveals that the curvilinearity of the U-shaped relationship between creation and venture growth will be stronger for older family firms than for younger ones.

RESEARCH LIMITATIONS/IMPLICATIONS : The study findings may be limited by the cross-sectional nature of the data and the specific focus on family firms only.

PRACTICAL IMPLICATIONS : The results highlight the significance of pursuing both opportunities among family firms. In fact, both creation and discovery opportunities are significant drivers of family firm growth, albeit in different capacities. Relatedly, managers of older family firms (compared to younger firms) can invest more in exploiting creative opportunities.

SOCIAL IMPLICATIONS : From these findings, governments and other stakeholders should create enabling environment and institutional frameworks conducive to exploiting opportunities by entrepreneurial firms.

ORIGINALITY/VALUE : The study is novel – as it provides unique findings on the performance implications of creation and discovery behavior of entrepreneurial family firms within developing economies.