Despite the growing interest in stretch goals—high-effort and high-risk goals set to inspire growth but difficult to achieve—there remains a lack of clarity on how such ambitious targets influence behavioral outcomes in family firms. Existing research shows divergent views on whether stretch goals foster innovative practices or lead to unethical behavior. This is particularly critical for family firms, where the tension between business objectives and socio-emotional wealth complicates decision-making. Addressing this gap, our study examines how family firms respond to the pressures of stretch goals. Applying a temporal construal perspective, we analyzed the cost-benefit perceptions of achieving stretch goals through an archival study of 1,026 publicly listed Chinese companies and a field survey of 271 top-level managers. The findings revealed that that family firms are more likely to engage in unethical rather than innovative behavior under stretch goals. However, family firms with high transgenerational intention tend to prioritize innovation and reduce unethical practices. These insights provide nuanced insights into the dynamics of goal setting and ethical decision-making in family firms.
