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

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.