Relationship between Family Influence, Culture, and Digital Transformation

In an era marked by the rapid development of digital technologies, established firms face the necessity of digital transformation to remain competitive with digitally native entrants. Despite the acknowledged economic importance of digital transformation for family firms, the evidence is split. While some research suggests that family firms may grapple with digital transformation due to their traditional roots and rigid structures, many family firms are at the forefront of digital transformation within their industries. These differences suggest that there may be family-specific and contextual factors at play that shape the scope and pace at which family firms engage in digital transformation. This book addresses this ambiguity by adopting a qualitative, exploratory approach, employing grounded theory methodology to disentangle the interplay of family influence and national culture with digital transformation in family firms. Drawing on rich qualitative data from 31 semi-structured interviews with German and Chinese family firms and 24 expert interviews with digital transformation professionals, a process model emerged to deepen our understanding of family and cultural influences in shaping the digital transformation process. Cultural differences between German and Chinese family firms influence the way digital transformation unfolds but, contrary to initial expectations, play a minor role in explaining differences in the pace of digital transformation. Family influence appeared to be a more salient explanation for these differences. The findings show that family influence has a yin and yang effect in that it can bring friction and uncertainty but also promote alignment and long-term resilience. Ultimately, the family’s stance on digital transformation shapes both its initiation and execution. In addition, this book sheds light on the decision logic underlying the uncertain and emerging conditions of digital transformation and offers practitioners valuable insights into the likely impact of these decisions on future outcomes.