Succession, political resources, and innovation investments of family businesses: Evidence from China

Abstract

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.

The intergenerational succession and financialization of Chinese family enterprises: Considering the influence of heirs’ growing experience

“…The achievements have not only covered traditional research topics ( Cai et al, 2019 ; Weng and Chi, 2019 ; Zhang and Luo, 2021 ), but also extended this research field based on the particularity of internal and external conditions faced by Chinese enterprises, such as CSR of intergenerational succession in family enterprises ( Chen, 2018 ), operational strategic capital ( Bin-Feng et al, 2022 ), investment in enterprise innovation ( Xiong et al, 2021 ) and so on. Moreover, mechanisms of more factors are further elucidated, including family board’s excessing control ( Liu et al, 2021 ), heirs’ education experience ( Zhu and Lv, 2019 ), first entrepreneurs’ altruism ( Zhu et al, 2021 ), and intergenerational transmission of political resources ( Yang et al, 2022 ).…”

The Impact of Intergenerational Succession Intention on Family Firm’s Innovation Strategy: Evidence from China

“…On the other hand, external investors will have varying needs for the company’s organizational administration and capital allocation, putting the family’s exclusive control of the company in jeopardy. Family businesses, on either hand, must initiate non-family technicians to meet the technical support and innovation requirements of technological innovation activities, and the leading role of technical experts changes the licensing and decentralization mode of the organizational structure, limiting family control over the technical route of products and technological innovation department (Shi et al, 2019 ; Yang et al, 2021a ). Therefore, when business owners have the will to pass on equity and management rights to the next generation at the same time, they will strengthen family control and pay attention to constrained SEW to avoid the development of technological innovation activities.…”

“…According to the survey, only 55.5% of private organizations are family firms if the family businesses are characterized by ownership and management. When considering family ownership, management, and multigenerational family involvement, the number of family businesses in China may be relatively small (Chen et al, 2021 ; Kubíček & Machek, 2019 ; Yang et al, 2021a ).…”

“…The appropriateness of the successor is essential to what the creator has been capable of holding the country for a lifetime, given the obstacles of the complex and challenging international economic and political situation, increased domestic expenditures, and downward pressure on the economy (Huang et al, 2019 ; Sari & Masdupi, 2020 ; Yan & He, 2019 ). Because of China’s traditional “home” culture, many family enterprises in the country “follow the father’s company.” Many creators, on the other hand, have begun to free their minds, putting aside the outdated concept of “no outsider” and attempting to find appropriate successors from a wider variety of immediate children, friends, and relatives, as well as subordinate employees and professional managers, in order to open up a fresh way to pass the baton of the family business today (Qi et al, 2021a , b ; Yang et al, 2021a , b ; Yu et al, 2018 ).…”

The influence of non-family members in top management teams on research and development investment: Evidence from Chinese family firms

“…As China transitiones from a centrally planned economy to a socialist market one, the family firms have occupied the main share [32]. Innovation is of great significance to Chinese family businesses against the background of accelerating economic transformation [33]. In response to the need for market expansion, it has become progressively obvious that family leaders adopt the strategy of de-familization by introducing talents and funds [34].…”