Intergenerational Succession of Family Firms:A Continuation or Rupture of the Innovation Spirit?

Abstract

Abstract:

Using China's 2003-2013 listed family firms as our sample, this paper attempts to test family firm intergenerational succession effects on firm innovation to provide empirical evidence and a new insight to explain the hindering factors of family firms' long-term duration. It is found that the intergenerational succession of the family firm has restrained firm innovation and the reason lies in successors' myopia preference. Further, for a family firm that has experienced the intergenerational succession, if it has less holding family inner conflicts and a better ownership design and corporate governance, its innovation will suffer less from intergenerational succession. We test the institutional dilemma which is not conducive to firm innovation in family firms experiencing intergenerational succession, and find that poor information environment is harmful to the intergenerational succession of family business, leading to a sharper decline of firm innovation when intergenerational succession occurs. Meanwhile, the intergenerational succession of the family firm has brought about a significant loss of value. This paper not only extends the research on the family firm, but also provides policy implications for promoting firm innovation and even economic growth quality.

Key words: family firm, intergenerational succession, firm innovation, value loss

Cheng Chen. Intergenerational Succession of Family Firms:A Continuation or Rupture of the Innovation Spirit?[J]. , 2018, 30(6): 81-92.

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