How do family firms respond strategically to the digital transformation trend: Disclosing symbolic cues or making substantive changes?

Digital transformation (DT) has been identified as one of the major trends that is changing society and business. Firms respond strategically to the DT trend in different ways. The results of this study, based on Chinese listed companies, demonstrate that, as family firms have stronger needs for legitimacy and are sensitive about investing in uncertain projects, they are more likely than their non-family counterparts to disclose more symbolic cues about DT while investing less substantively in DT, that is, they emphasize DT in their annual reports to a greater extent while making fewer digital investments. We also investigated firm- and provincial-level contingencies. Specifically, we show that family firms located in provinces with better digital infrastructure are more likely to disclose symbolic cues about DT and invest substantively in DT. Family firms that have completed the intergenerational succession process are shown to be more likely to disclose symbolic cues about DT.