CEO passion, digitalization, and family firm performance: A socio-emotional wealth perspective

Abstract

Family business leaders often grapple with paradoxical tensions between digitalizing their companies and preserving their social-emotional wealth (SEW). This study focuses on the influence of chief executive officers’ (CEOs) passion for inventing (PFI) on the performance of family firms. It further examines how digitalization capacity mediates this relationship and how the commitment to preserving SEW may moderate it. For methodological rigor, we employed a dual data approach, using primary and secondary data from 100 family firms. We found no significant direct effect of CEOs’ PFI on the performance of family firms. However, this impact is indirect, primarily affecting digitalization capacity. Additionally, a strong commitment to preserving SEW can shift the influence of CEOs’ passion on digitalization capacity from positive to negative. Our findings suggest that family firms should not exclusively focus on non-economic goals because this could hinder CEOs’ efforts toward digitalization. Instead, family CEOs should create a balance between the preservation of SEW and digitalization capacity, which contributes to increased performance. This study adds to the knowledge of upper echelons theory and SEW theory by examining the nuances of the interactions between CEOs’ PFI, digitalization capacity, and performance in family business.