Abstract: Family business governance is a process of both corporate governance and family governance, but most of existing researches focus on corporate governance from the corporate system, ignoring the governance within the family. In particular, as more and more Chinese family businesses enter the firstand second-generation succession process, it is obvious that just focusing on corporate governance cannot guarantee the stable operation and smooth inheritance of the company, and the design and implementation of family governance mechanisms will become indispensable. In view of this, this paper uses the database of the 14th China Private Enterprise Survey to focus on the impact mechanism and effect of family governance on corporate innovation investment. The study finds that family governance significantly improves the level of innovation investment of enterprises. Furthermore, with the development of firm life cycle, the level of family involvement and the improvement of level of owner's identification with family business identity, the positive role of family governance is gradually enhanced, and the joint effect between family governance and corporate governance is also transformed from substitution to synergy. Mechanism test shows that family governance can enhance the level of innovation input by strengthening family succession intention and reducing labor and financing costs. This paper helps to deepen the knowledge and understanding of the effect of family governance in family business, and thus provides some practical inspiration on how to design and implement family governance in a timely and appropriate manner.

Key words: family business, family governance, corporate governance, firm innovation