Dynamic Capabilities and Transgenerational Value Creation in Family Firms

While some research on entrepreneurship in family businesses has focused on transgenerational value creation, a gap exists in understanding how such value is generated across generations. The present research offers insights through the lens of dynamic capabilities, which are created by knowledge and in turn generate entrepreneurial performance and value creation. A model is built based on literature and case research. The crucial role of the organizational culture emerges through the empirical study. Family inertia is considered to be a factor preventing the creation of dynamic capabilities. We find that family inertia depends on characteristics of the family business culture, where paternalism and entrepreneurial orientation influence family inertia positively and negatively, respectively. Family firms from Switzerland and Italy active in the beverage industry represent the empirical context. Theoretical and practical implications are offered. INTRODUCTION Family firms throughout the world are the most common form of organization, especially among small and medium-sized enterprises (Gersick et al., 1997; Westhead and Howorth, 2007). While family firms play crucial roles in the creation of economic and social wealth, they face significant challenges to survive and prosper across generations. Some family firms, however, have a striking ability to achieve longevity and maintain a competitive edge for many generations. This makes them a vital and important area of study with relevance also for other types of businesses (Miller and LeBreton-Miller, 2005). In particular, there is a strong interest among scholars to gain a deeper understanding of the role of entrepreneurship for long-term growth and longevity of family firms. Entrepreneurial family firms are able to foster competitive resource allocation processes towards value creation across generations (Habbershon and Pistrui, 2002; Sirmon and Hitt, 2003). They form a specific organizational context for entrepreneurship research as a result of the systemic interactions between the family, its members and the business (Habbershon and Williams, 1999).