Abstract
Interest in family firm innovation has increased in recent times, generating the assumption that family firms are less willing to innovate than nonfamily firms. We investigate firm innovation inputs by examining whether family firms differ from nonfamily counterparts regarding innovation intentions. We then adopt an upper echelons perspective to study whether the TMT functional diversity and open discussion explain the alleged lower intention to innovate of family firms. The analysis of survey data from 393 Italian firms reveals that family firms are less willing to innovate than nonfamily firms and that the TMT functional diversity partially mediates this result, meaning that family firms develop lower innovation intentions due to their lower TMT functional diversity compared to nonfamily firms. Focusing on family firms, we find that the relationship between TMT functional diversity and innovation intentions is positively moderated by TMT open discussion. Our study shows that TMT functional diversity and TMT open discussion are essential to stimulate family firms' innovation intention, contributing to the family business innovation literature, the debate on the ability-willingness paradox, and upper echelons research. Moreover, it provides practical implications by highlighting the importance of creating a functionally diverse TMT, while fostering open discussion among its members.