Today is the day. As promised a couple of weeks ago, let us begin transferring knowledge from science into practice. The article I am bringing you today bridges waters (and blood) between family-owned businesses, IT investment, and control. Each of these topics is fascinating on its own – so let's put them together and propel ourselves into a fabulous Monday.
How shall we proceed?
First, a quick recap of what the article is about – because it truly is fascinating. Then, we will look at what we can take into practice.
So, please enyjoy: "Blood and Water: Information Technology Investment and Control in Family-owned Businesses" by Abhishek Kathuria, Prasanna P. Karhade, Xue (Nancy) Ning & Benn R. Konsynski (2023)
What is it about?
The first thing that stands out is the sheer size and richness of the study. The insights are drawn from 10,437 firm-year observations across 3,277 publicly listed companies in India between 2006 and 2018. IT investment was measured as capital expenditure on hardware, software, infrastructure, and IT-related R&D as a percentage of sales. This financial information was then combined with detailed ownership data (how much of the firm is family-controlled), information on whether the top executive was a family member or a professional outsider, and indicators of market hostility.
What do we see?
The study reveals three robust patterns.
First, family firms invest less in IT. They take a cautious, value-for-money approach and avoid systems that reduce information asymmetry or create digital trails.
Second, this changes under one condition: when the top team includes an outsider. Once a family firm hires a professional, non-family CEO, IT investment rises. Control is the central mechanism here. When the CEO comes from outside the family, information asymmetry stops being universally beneficial for the owner family. Suddenly, digital tools that create transparency, provide monitoring, and reduce guesswork become desirable. Interestingly, control plays a decisive role in both scenarios: in the "family only" configuration, control is achieved through opacity; in the "mixed" configuration, control is achieved through visibility.
Third, family firms extract more value from each euro invested in IT in hostile market environments. Their long-term orientation and deeper business knowledge allow them to align technology and strategy more efficiently than non-family competitors.
How does it align with what we know?
The study confirms what we already know about family-owned businesses: their long-term orientation, their preference for sustainable cash flows, and their caution around risk. These are their strengths. IT, on the other hand, develops at a dizzying tempo, which can trigger a quiet hope that "this too shall pass." As a result, decision-making - especially around IT - can become slow, hesitant, and highly selective.
We also know that many family CEOs, especially first-generation entrepreneurs who built the business, rely on heuristics, personal experience, and intuition. They may be sceptical of the value that systematic measurement, monitoring, and digital tools can bring.
In short, the results do not contradict what we know about family-owned firms. But that leads to the real question: what can we take from it?
What can we transfer into practice?
The findings translate into very tangible, practical questions:
I find these questions a useful way to recalibrate, regroup, and stay honest with yourself – especially as the year draws to a close and we begin getting our ducks in a row for a good duck-hunt next year. And this is exactly where science can sharpen our practice – and I will gladly keep doing the heavy lifting and squeezing the juice out of its fruit for you.
