How does family involvement affect innovation in China?

This paper explores the types of family involvement in family firms and their impact on innovation performance. Drawing from our agency theoretical analysis on the structure of boards of directors and management teams and along with the resource-based view, we advance the novel proposition that what matters in the innovation process is the type of family involvement, not involvement per se. The empirical study on a sample of 102 listed family firms in China from 2005 to 2007 suggests that family involvement in boards tends to strengthen the positive relationship between R&D investment and innovation performance, whereas family involvement in management teams tends to weaken this positive relationship.