Abstract: Family firms are one of the most important components of Chinese enterprises and the level of their innovation capability bears heavily on the overall innovation and transformation of the Chinese economy. Drawing on data from a random sample of manufacturing firms collected in 2018 from China Employer-Employee Survey ( CEES), we select two dimensions of innovation input and innovation output to make a robust empirical analysis on the innovation differences between family enterprises and non-family ones. Benchmark regression shows that under the premise of effectively controlling the duration, ownership type, technology spillover, innovation agglomeration and fixed effect of industry, region and year, the R&D investment and valid patents are significantly lower at family firms than at non-family ones. Moreover, in the fields of effective invention patent, production method innovation and auxiliary production system innovation, family firms’ innovation performance is significantly lower. After solving the measurement error, causal inversion and omission of variables, the robustness test shows that the “low innovation” feature of family firms is still robust. Further analysis shows that the poor innovation performance of family firms are mainly concentrated in the regions and industries with sufficient market competition. Compared with first-generation family firms, the innovation inputs and outputs of second-generation family firms are relatively high. The mechanism test shows that the low entrepreneurial ability and management quality are the important reasons for the innovation differences between family firms and non-family ones and the innovation heterogeneity of family firms managed by different generations. The use of instrumental variable estimation strongly supports the poor innovation performance of family firms.

Key words: family firms, innovation, China Employer-Employee Survey