13 Feb

Ownership and Management Control Effects on IT Investments: A Study of Indian Family Firms

Authors: Xue Ning, Jiban Khuntia, Prasanna P. Karhade and Abhishek Kathuria


Research alludes to mixed preferences for IT investment on the part of family owned firms. While family firms have inhibitions towards risky, long-term investments, such investments are also crucial for the long-term success and multi-generational survival of these firms. These dynamics are aggravated when considering the two modes of management the family owners can employ – family-related managers versus professional managers. We rely on the theoretical perspectives proposed in the socioemotional wealth perspective to propose three hypotheses that explain the different moderating effects of family- and professional- management controls on the relationship between family ownership and IT investment. Generalized least squares estimation of our unbalanced panel of 6,669 firm-year observations of 2,148 Indian family-owned firms from 2006 to 2018 uncovers three findings: family ownership has a negative influence on IT investment, family management strengthens this relationship, and professional management weakens this relationship.

Keywords: IT Investment, Family Firms, Management, India, GREAT domains.