We argue that knowledge differences between the first- and second-generation family members induce intergenerational feedback, and their cognitive differences trigger intergenerational conflict, which both lead to portfolio entrepreneurship in family businesses. Using a sample of Chinese family firms for the period 2008 to 2021, we confirm that knowledge differences and cognitive differences promote portfolio entrepreneurship in family firms. Our findings further suggest that maternal involvement strengthens the positive relationship between knowledge differences and portfolio entrepreneurship, and weakens the positive relationship between cognitive differences and portfolio entrepreneurship in family businesses. The participation of multiple offspring of the founder enhances the positive impact of cognitive differences, but does not moderate the relationship between knowledge differences and portfolio entrepreneurship. Our study provides a nuanced picture of how intergenerational differences propel portfolio entrepreneurship via distinct interaction mechanisms. We expand the research on family dynamics by identifying antecedents of portfolio entrepreneurship in family businesses.
