| Summary: | Research on Open Innovation (OI) is flourishing and opening the innovation process is increasingly perceived as a vital source for sustained competitive advantage. Nascent research on OI in family firms left us to wonder whether the performance-enhancing effects of OI also hold true for family firms. What we do know so far is despite that family firms typically possess greater ability to innovate, they lack the willingness to do so. Taking this as a starting point, the purpose of this study was to identify sources of family firm heterogeneity, in order to explain how these differences influence their willingness to engage in OI and further assess the overall relevance of OI models for family firms. In an attempt to resolve the innovation paradox, the present study builds upon a multi-theory approach of behavioral lenses, to capture the inherent complexities of family firm innovation. Empirical evidence from a cross-industry analysis of 176 German Mittelstand firms provides strong support for the importance of OI practices in a family firm context. Precisely, we affirm that family firms generate increased performance outcomes when engaging in OI. Our findings unearth a double-edged sword that higher generations foster a family firm’s willingness to engage in OI, but hamper their ability to benefit from it. Our findings are especially relevant in light of current market dynamics and build the bridge between OI and family firm research in an insightful manner. We thereby contribute to solving one piece of the innovation puzzle and identify promising areas for future research.
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