Innovation capability and internationalization in family firms: Themoderating role of family involvement across governance layers

Abstract

Innovation is widely recognized as a driver of internationalization, but it does not automatically translate intointernational scale. This is especially true for family firms, where governance structures and socioemotionalwealth (SEW) priorities shape willingness to commit resources to foreign markets under uncertainty. Drawing onthe Uppsala Model, we examine how family involvement moderates the translation of innovation into internationalization.We propose a governance-layered perspective: family involvement in the top management team(TMT) activates a restricted SEW orientation that may limit international commitment, whereas involvementoutside the TMT fosters an extended SEW orientation that facilitates it. Using a longitudinal dataset of 7994observations from 1506 Spanish SME family firms (1996–2020) and a two-step GMM estimation, we find thatfamily involvement outside the TMT positively moderates the innovation-export intensity relationship, whileinvolvement within the TMT has a negative effect. Our study advances the Uppsala Model by introducinggovernance-layered SEW as a behavioral mechanism explaining heterogeneity in firms’ commitment to foreignmarkets, offering both theoretical insight and practical guidance for family firms seeking to leverage innovationfor international growth.