Long-term Orientation in Family Firms: A Bayesian Analysis of R&D Spending
|A stronger long-term orientation is often considered a competitive advantage of family firms relative to non-family firms. In this study, we use panel data of U.S. family and non-family firms and analyze whether and under what conditions family firms are more long-term oriented than non-family firms. Our findings are surprising. Using data on R&D spending as a proxy for long-term orientation, we find no evidence that family firms per se invest more resources in long-term projects than non-family firms. However, analyzing a sample of family firms only, we find that family management is positively related to a higher level of R&D spending, whereas family ownership seems to have a negative impact. We conclude that both incentive and entrenchment effects matter when considering the long-term orientation of a family firm. Our empirical analy-sis is based on a Bayesian approach, which so far has only been rarely used in strategy research. We show that this approach offers some unique advantages when analyzing the robustness of the results with regard to the definition of key variables, when competing hypotheses exist, and when the variables of interest are strongly interrelated.
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