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We investigate whether family ownership is associated with a preference for patents or trade secrets. Using a sample of S&P 500 firms, we show that family ownership is negatively associated with patenting and positively associated with the usage of trade secrets. We further show that both relationships are moderated by firm performance below the aspiration level. These results can be explained with a mixed gambles behavioral agency framework. When family firms perform below their aspiration level, prospective financial gains become relatively more important as compared to current socio-emotional wealth so that patents become more and trade secrets less attractive.
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Hussinger et al. (2025) studied this question.
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