Evading the family firm willingness-ability paradox through partnership

Purpose The study examines whether partnerships (strategic alliances and joint ventures) help family firms overcome the willingness-ability paradox by increasing R&D investment and improving innovation outcomes. Design/methodology/approach The study uses 4,069 firm-year observations for 452 US family firms. Partnership activity is obtained from the SDC Joint Ventures/Alliances database and matched with Compustat investment data and USPTO patent outcomes. Innovation outputs are measured using market-based patent values as per Kogan et al. (2017) (KPSS hereafter) and forward-citation metrics. Ordinary least squares, propensity score matching and Heckman two-stage models, instrumenting partnership participation with vertical integration, estimate effects on investment allocation and subsequent innovation. Findings Family firms engaged in partnerships invest more in R&D, increasing R&D spending by about 1.1% of assets and reducing capital expenditures. Two years after partnership formation, partnered firms show significantly higher patent portfolio value and citation impact, with greater benefits evident for highly complex firms in both high-tech and low-tech industries. Innovation-oriented partnerships (cross-technology, R&D, licensing and technology-transfer arrangements) and strategic alliances produce the largest gains. Practical implications Family-firm executives can use strategic partnerships, particularly innovation-oriented collaborations, to share innovation risk, access external capabilities and translate R&D into higher-value and higher-impact patents while protecting socio-emotional wealth. Originality/value The paper links family-firm paradox research to interfirm partnerships through an operational risk management mechanism and evaluates innovation using both input and market- and knowledge-based output measures.