R&D Investment in Family and Non-Family Sart-ups: A Behavioral Perspective



The behavioural theory of the firm suggests that reference points influence the level of individual and organizational risk taking. In this study we propose that family start-ups and start-ups performing below aspiration have distinct reference foci which influence their level of research and development (R&D) investment intensity. Longitudinal data from the Kauffman Firm Survey (KFS) on 912 U.S. start-ups provides empirical evidence for our theoretical framework. We find that family start-ups in which at least two members of the same family own the majority stake invest less into the R&D of new products and services compared to non-family start-ups. Whereas performance below aspiration generally increases start-ups’ subsequent R&D investment, this relationship is negatively moderated by family start-up status such that family start-ups increase their R&D expenditures to a lesser extent after performance below aspiration.