This paper empirically tests the impact of the succession of family businesses on corporate innovation investments and examines the two different types of political resources, political connection and state ownership, in the moderating role of the relationship between succession and enterprise innovation investments. The results show succession hinders the innovation investment of family firms, and political connection has a negative moderating effect on the relationship, while state ownership has a positive moderating effect. Further research shows that in areas with poor institutional environment, the negative adjustment effect of political connections is more significant, and in areas with better institutional environment, the positive adjustment effect of state ownership is more significant.

We examine the impact of the lack of institutional environment on the succession of family businesses and explore the moderating role of state ownership in the relationship. The empirical results show that in areas with poor institutional environment, it is more difficult for family business to inherit from generation to generation. State ownership in a family business can be used as an informal system to mitigate the negative impact of an imperfect institutional environment on succession. We also find that when state ownership comes from the local government or participates in corporate governance, its moderating effect is more significant.

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