Navigating the politics of innovation in family firms: The role of political capital

Abstract

In family firms, innovation poses distinct challenges due to the social complexity resulting from the intertwining of the family and business systems. While prior research has focused primarily on the powerful role of the dominant family coalition in leadership positions, much less attention has been paid to middle managers who must navigate the social complexity in family firms to implement management innovations. Through a multicase study of two highly innovative family firms, we theorize and demonstrate how middle managers engage in coalition building to address the social complexity in family firms when pursuing management innovation by creating a new organizational unit dedicated to managing innovation at the corporate level. Our study shows that middle managers change the social evaluation of the transfer of political capital from the dominant family coalition through enforcement and detachment. Subsequently, they convert, invest, and then mobilize different sources of political capital to gain power through pragmatic persuasion and altruistic evangelizing. Finally, we find that the dominant family coalition employs two distinct modes of political stewardship with respect to family and nonfamily middle managers.