The behavioral agency model (BAM) suggests that to preserve socioemotional wealth, loss averse family firms usually invest less in R&D than non-family firms. However, BAM's predictions are inconsistent with the well-accepted premise that family firms have a long term investment orientation. We reconcile these seemingly incompatible predictions by adding insights from the myopic loss aversion framework, which deals with the impact of decision-making time horizons. The combination of these two prospect theory derivatives lead us to hypothesize that family firms will usually invest less in R&D than non-family firms but the variability of their investments will be greater owing to differences in the compatibility of long- and short term family goals with the economic goals of the firm. However, when performance is below aspiration levels, we theorize that family goals and economic goals will tend to converge. In this situation the R&D investments of family firms are expected to increase and the variability of those investments decrease, relative to non-family firms. Analysis of 964 publicly-held family and non-family firms from the S&P 1500 between 1998 and 2007, support our hypotheses, confirming the need to take the heterogeneity of family firms more fully into account.