Firms’ Contribution to Regional Economic Development: Unravelling Some Explanatory and Moderating Variables

Drawing on entrepreneurial orientation (EO), family business, strategic decision-making (SDM) and social capital (SC) theories, we investigated whether the family and non-family firms contribute differently to regional economic development (RED) and the moderating role of family involvement in firms. Using survey research design and data from 307 Kenyan firms, the findings of the study showed that: a) Firms’ EO positively influences RED, but the effect of family firms’ EO on RED is twice that of nonfamily firms; b) the relationship between strategic decision-making and RED is negative and this is more pronounced in family firms than nonfamily firms; c) Bridging social capital’s (BSC) influence on firms’ contributions to RED is positive, but nonfamily firms’ BSC effect is twice that of family firms; d) family involvement moderates the effects of firms’ contribution to RED. The overall conclusion of this study is that better understanding of firms’ effect on RED can be achieved by using a range of theories in combination, as such use would help to unpack the underlying mechanisms through which firms influence RED. Finally, theoretical and practical implications are discussed.