Inventory holding strategy and the role of board expertise in family firms: just-in-case or just-in-time?

• We study inventory-holding strategies employed by family-owned firms. • Family firms employ a conservative "just-in-case" (JIC) inventory strategy. • JIC strategies are more prevalent in eponymous firms and with family chairpersons. • A critical mass of quality directors shifts family firms toward inventory efficiency. We study the inventory-holding strategies of family firms and the role of a “critical mass” of quality directors in shaping these practices. Utilizing a sample of Israeli firms, our findings reveal that family firms, driven by long-term orientation and reputation concerns, often adopt a conservative "just-in-case" (JIC) inventory strategy, particularly in eponymous firms or those with family members as chairpersons. However, when boards have a critical mass of financially proficient directors, these firms tend to shift towards a more efficient "just-in-time" (JIT) inventory approach. This study offers new insights into the influence of family involvement and board composition on inventory management and strategic decision-making in family firms.