Governance as Capability

Abstract

<p>Family-owned small and medium-sized enterprises (SMEs) are central to Morocco’s economy, yet the ways in which family involvement shapes growth-relevant organizational capabilities remain underexplored. Drawing on the dynamic capabilities perspective, this study analyzes survey data from 134 Moroccan SMEs using Partial Least Squares Structural Equation Modeling (PLS-SEM). It examines whether family ownership concentration and family management influence the adoption of digitalization, innovation, and human resource management (HRM), whether these capabilities affect growth, and whether family involvement directly or conditionally shapes growth outcomes. Digitalization is positively associated with SME growth, whereas innovation has a marginally negative association and HRM has no significant direct effect. Family ownership concentration is modestly associated with stronger growth, while family management is associated with weaker growth. Family-managed firms report higher levels of digitalization and innovation, whereas concentrated ownership is negatively associated with digitalization and unrelated to innovation or HRM. Moderation results show that ownership concentration strengthens the digitalization–growth relationship, while family management weakens it; no significant moderating effects emerge for innovation or HRM. These findings distinguish adoption, direct, and moderating pathways and indicate that governance matters most in converting digital investments into growth. Policies should therefore combine digitalization support with the professionalization of managerial roles in family firms. The study is limited by its cross-sectional, single-region design, and future research should use longitudinal data and more refined measures of governance and capability intensity. </p>