Abstract: Family business is considered the backbone of most countries' economies. One aspect that arouses interest in the scientific community is family business risk behaviour due to its involvement in business strategy and sustainability, business performance, goals and behaviour of family members, and even macroeconomic issues. However, there is controversy in previous evidence, especially regarding the determining factors related to family managers' characteristics. Therefore, given that family business scholars call for more research on the family business heterogeneity at the individual-level to explain its behaviour at the business-level, this article analyses the influence of manager's financial literacy on family business risk behaviour from an upper-echelon theory perspective. Moreover, it examines the moderating role of the generational stage from a mixed gamble perspective. Partial least squares structural equation models are applied to 292 small and medium Spanish family businesses. Our results show that financial literacy positively influences family business risk behaviour. Moreover, our research found that the generation that controls family business moderates the financial literacy-family business risk behaviour relationship as follows: (1) first-generation or controlling owner, weak influence; (2) second-generation or sibling partnerships, moderate influence; (3) third and subsequent-generations or cousin consortiums, strong influence. These findings are highly relevant for the family business research community in general and managers and shareholders in particular since they evidence the relevance of managers' financial literacy in family business risk behaviour considering the generational stage implication, shedding light on a new individual-level determinant that can lead the family business to adopt a higher risk in a well-founded way.
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