Between Financial and Socioemotional Wealth: Navigating Knotted Tensions in Family Business Innovation

ABSTRACT Current research on family business innovation tends to isolate individual tensions for analysis, while in reality, these tensions often arise in complex entanglements. To fill this research void, we focus on understanding how multiple tensions occur in the innovation process, how these tensions are entangled, and how they are managed. We turn to the financial wealth–socioemotional wealth [FW‐SEW] trade‐off, which is a useful lens for understanding how family managers address tensions in a family business. We draw on a semi‐grounded multiple case study research that includes 51 in‐depth interviews across six private Cypriot family businesses. To assist in interpretation and analysis and enhance the robustness of our findings, we triangulate our data with 53 observations and 288 documents across the cases. We identify three knotted innovation tensions sensed by family managers based on the FW‐SEW trade‐off: inclusive innovation, stewardship‐focused innovation, and family routine innovation tensions. Our findings also reveal three corresponding strategies for managing knotted innovation tensions—controlled inclusivity, family‐driven responsible innovation, and fostering family‐business harmony—each aimed at balancing FW and SEW priorities. Our study re‐conceptualizes innovation tension management in the family business as entanglements of multiple tensions that must be properly sensed and managed.