The absorptive capacity of family firms: How familiness affects potential and realized absorptive capacity

Absorptive capacity (AC) is a key competitive advantage and is defined as the capacity to absorb knowledge from the environment. Although some studies have examined how various antecedents to AC differ between family firms and non-family firms, no studies have set out to specifically analyze AC in the context of family firms. The purpose of this paper is to discuss the ability of family firms to absorb external knowledge by analyzing the relationship between “familiness” and “AC”.

By reviewing and combining studies on AC and knowledge-management practices of family firms, new insights into the AC of family firms are developed.

It is argued that due to higher levels of social capital, familiness is positively related to the ability to transform and use external knowledge (i.e. realized AC). However, firms with high levels of familiness are likely to be inferior in acquiring and assimilating external knowledge (i.e. potential AC).

Although previous studies have analyzed various knowledge-management practices of family firms, no studies have set out to specifically explore how familiness affects various dimensions of AC.