Don't Ever Take Sides with Anyone Against the Family: Family Ownership and Information Management

Family-owned firms constitute majority of businesses in China, the United States, and India. We merge the Socioemotional Wealth perspective and microfoundations-based theories to explore the combined effect of nature of ownership and the top management team, on investment in IT-based Information Management. Analysis of an unbalanced 11-year panel of secondary data from all publicly listed firms in India, constituting 3,800 firms and 16,079 firm-year observations, finds support for our primary thesis: since preservation of socioemotional wealth is the primary desire for family owners, family ownership is negatively associated with investment in information management. We also find that family owners‟ ability, reflected through presence in the top management team, mitigates this negative relationship. Surprisingly, the effect of presence of professionals in the top management team on the relationship of family ownership and investment in information management was not significant, demonstrating that you don't ever take sides with anyone against “The Family”.