Abstract: In-laws are an important component of family business kinship and a significant source of heterogeneity in family businesses. This paper takes the kinship data of Chinese listed family businesses from 2003 to 2022 as a sample, and based on social identity theory, examines the impact of in-laws’ involvement in management on the strategic transformation of family businesses. Our research finds that involvement of in-laws in management can hinder the implementation of strategic changes in family businesses. Further research finds that the level of strategic change in family businesses is lower when the intimacy of in-laws and kinship relationships are low; when the in-laws involved in management are the in-laws of the actual controller’s siblings and male in-laws, it is conductive for family businesses to implement strategic changes. Heterogeneity analysis finds that when a family business is located in an area with low social trust and faced with higher environmental uncertainty, the involvement of in-laws in management hinders the implementation of strategic changes in the family business more significantly. Finally, this paper finds that the involvement of in-laws in management has a restraining effect on strategic change and will reduce the long-term value of family businesses. This paper not only expands the research on the driving forces of strategic change in family businesses from a new perspective, but also has certain enlightening significance for how to effectively optimize the family governance structure to drive enterprise change and promote enterprise transformation and development.

Key words: in-laws’ involvement in management, strategic change, family business, social identity theory