Intergenerational Succession Research Articles

Intergenerational Succession in Family Businesses and the Risk of Corporate Default

Intergenerational Succession in Family Businesses and the Risk of Corporate Default

The imprint effect of initial institutional environments and bank financing in family businesses

The initial imprint embedded in family business origin provides us with favorable support for identifying how past institutional environments and then current governance characteristics influence financing. This study investigates the influence of family business origin on loan borrowing, and finds that restructured family firms (RFFs), which are formed through the restructuring of collective-ownership enterprises, are likely to obtain more loans compared to entrepreneurial counterparts (EFFs). The effect varies with local marketization, family control rights, and intergenerational succession. Our findings suggest that restructured family firms have a sounder modern enterprise system, less information asymmetry, and consequently pose less credit risk, which allows them to access loans more easily. In addition, institutional differences stemming from the origin of the firms affect the composition and cost of bank financing. RFFs outperform EFFs in terms of the size of non-local bank loans and the cost of loans. Overall, this study shows that the institutional environment of family firms at the founding stage has a long-term impact on future financing.

Inter-generational governance transition in Chinese family businesses: Relational or contractual?

Inter-generational succession in family enterprises influences internal governance models, and their relationship is mediated by the successor's socialization process. Drawing on the enterprise capability theory, the author employed a survey method to examine the relationship between cognitive assets held by family enterprise successors and two governance modes. The findings confirm that tacit knowledge, relational networks, and entrepreneurial spirit among family enterprise successors positively influence their socialization roles, thereby triggering governance adaptation. Specifically, relational governance is continuously strengthened, while contractual governance exhibits an inverted U-shaped trend. Organizational conventions play a positively moderating role in this influencing process. This study extends the application boundaries of enterprise capability theory, deepens the understanding of enterprise cognitive systems, enriches the literature on the relationship between relational and contractual governance, and provides theoretical foundations for inter-generational governance in family enterprises.

Intergenerational Succession and Smart Manufacturing: The Effect of Sibling Number on Change Timing

Intergenerational Succession and Smart Manufacturing: The Effect of Sibling Number on Change Timing

Exploring Key Elements for Achieving Intergenerational Family Business Succession in the Chinese Context

In the rapidly evolving Chinese economy, family-owned businesses, integral to the nation's GDP and innovation, face a significant challenge with an impending wave of intergenerational succession. With over 5.5 million such businesses, less than 20% have identified successors, and only 6% have established succession plans. This study examines intergenerational succession in these businesses, applying Handler's (1989) satisfaction and effectiveness framework, alongside Pyromalis et al. (2006)'s model. The research, conducted through interviews with second-generation owners, aims to uncover factors influencing succession satisfaction and effectiveness. Key findings highlight the unique impact of Chinese cultural values on the succession process. Unlike expectations, the reluctance of incumbents to relinquish control isn't a source of frustration for successors, reflecting the cultural emphasis on respect and deference to elders. The study broadens its scope beyond family dynamics to stakeholder relationships, acknowledging their importance in succession. This research merges theoretical and empirical analyses, adapting a Greek-tested model to the Chinese context, thus enhancing its global relevance. It provides insights into Chinese family business succession, shaped by cultural norms, and demonstrates the versatility of Western models in diverse cultural landscapes, enriching the understanding of global family business succession.

Beggars cannot be choosers? Legitimacy deficiency and the use of trade credit by family firms

AbstractWhile prior literature conceives financial distress as the primary driver of trade credit usage, organisational idiosyncratic characteristics and the situated institutional environment may also play a role. Building on the legitimacy‐based view, this study investigates whether family firms (FFs) – a special group of firms that are relatively understudied in the finance and accounting literature – in transitioning economies like China exhibit unique patterns of the use of trade credit. We found that increased family ownership leads to more usage of trade credit. Such inclination is stronger among FFs undergoing intergenerational succession, whereas it is weaker for FFs located in more developed subnational regions.

Parent‒Child Cogovernance and Corporate ESG Performance: Evidence from China

ABSTRACT Motivated by the research gap in parent-child intergenerational succession, this study adopts a stakeholder perspective and utilizes data from listed family firms in China spanning from 2010 to 2021 to explore the influence of parent-child cogovernance on corporate ESG performance. The findings reveal a significant positive relationship between parent-child cogovernance and corporate ESG performance, with this effect becoming more pronounced as parent-child cogovernance deepens. Furthermore, our analysis identifies “paternalistic care” and “reducing agency costs” as crucial mechanisms through which parent-child cogovernance enhances ESG performance. Importantly, the impact of parent-child cogovernance is particularly notable in firms characterized by lower first-generation control, limited political connections, and weaker external governance. The robustness of our results is confirmed through various methodological approaches including two-stage least squares estimation (2SLS), Heckman two-stage estimation, propensity score matching (PSM), and staggered difference-in-difference (DID) analysis. This study contributes significantly to the literature on intergenerational succession and corporate ESG performance.

Family business succession and corporate ESG behavior

This study explores the impact of family business succession on corporate ESG behavior, focusing on how decision-making changes during inter-generational transitions. It specifically assesses the influence of second-generation participation in family-owned enterprises on their ESG practices. The findings reveal a more pronounced effect in firms with high marketization and overseas exposure. This research underscores the intertwined nature of inter-generational succession and strategic decision-making in Chinese family businesses, highlighting the importance of studying ESG behavior to understand these dynamics.

“Spousal cogovernance” and enterprise innovation: an empirical study based on China’s listed family businesses

ABSTRACT Family businesses significantly influence the private economy and economic growth. Achieving sustainable development and innovation-driven national strategies necessitates fostering innovation in family businesses. Innovation enables businesses to prosper, mitigate market risks, and facilitate intergenerational succession. In contemporary Chinese family businesses, actual controllers, particularly spouses, play a crucial role in management and strategy formulation, which influences corporate innovation through synergistic effects and enhanced decision-making efficiency. This study investigates the impact of spousal cogovernance on family business innovation by analysing data from A-share listed Chinese family businesses from 2009 to 2020. The findings indicate that spousal cogovernance enhances innovation by promoting harmonious relationships and strong inheritance intentions. However, the number of actual controllers and Confucian culture may adversely affect the promotion of innovation. Moreover, agency costs serve as a mediating factor in driving innovation, and minimizing these costs could enhance innovation. In conclusion, this research expands the knowledge of family governance and innovation and illuminates the differences resulting from internal structural changes in Chinese family businesses. We underscore the significance of nurturing innovation and development in spousal cogoverned family enterprises.

Family business origin and investment preference: An empirical study of imprinting theory

Family businesses in China differ acutely with respect to their historical origins. The initial institutional differences based on their origins affect investment behavior, which then impacts on the real economy. This paper investigates how the origins of family businesses affect their investment preferences. Using data on Chinese family firms for the period 2009–2021, we find that family businesses restructured by state-owned enterprises (SOEs) make more financial investments than those established through entrepreneurial activities. The period during which the business is under the control of the founding family and intergenerational succession moderates the differences in investment preferences between restructured and entrepreneurial family businesses, while the time of being as an SOE can strengthen the differences. Mechanism tests demonstrate that restructured family firms (RFFs) participate in less risky activities than entrepreneurial family firms (EFFs), suggesting that preference imprinting contributes to divergent investments. Such a divergence is unlikely to be driven by differences in entrepreneurship, agency costs, or resource endowments. Following robustness tests and after overcoming endogeneity problems, our results remain conclusive. Overall, this study demonstrates that a business’s risk propensity during its founding phase has a long-term impact on future preferences.

Family Business Intergenerational Succession and Market Sustainable Competitive Advantage – Based on the Mediating Effect of Intellectual Capital

ABSTRACT China’s family enterprises have entered the peak of intergenerational succession, and the succession of the second generation is bound to have a great impact on the development of these enterprises. From the perspective of the resource-based view, this paper constructs a relationship model among intergenerational succession, enterprise intellectual capital and market sustainable competitive advantage. Based on the data of a sample of 189 entrepreneurs from family firms in Zhejiang Province, we use multiple regression and structural equation modeling to explore the impact of intergenerational succession on the market sustainable competitive advantage of family firms and the mediating role of the three dimensions of the firm’s intellectual capital, namely, structural capital, relational capital and human capital. The empirical results show that (1) successful succession of a family business significantly promotes the market sustainable competitive advantage of the enterprise; (2) successful succession has a significant promotion effect on the three dimensions of enterprise intellectual capital, and the three dimensions of enterprise intellectual capital play a partial mediating role between intergenerational succession and the market sustainable competitive advantage of the enterprises. This conclusion expands the research on the consequences of intergenerational succession and has important practical significance for the healthy development of family enterprises in China.

A Narrative of Rural Storytelling in Intergenerational Succession among Chinese Film Directors

Chinese society, at its essence, revolves around a core of agrarian culture. With a historical foundation deeply rooted in agriculture, the civilization of tilling the land has coursed through our collective veins for millennia, becoming an indelible facet of our identity. Chinese filmmakers, whether consciously or unconsciously, have exhibited a proclivity for rural themes, utilizing them as a canvas to convey sentiments of the countryside. This artistic inclination subsequently unfurls an exploration of the primal desires that smolder within the "peasant" at the core of one's being, obscured beneath the veneer of ancient asceticism. In the lexicon of Chinese cinematic discourse, the categorization and delineation of the Sixth Generation of directors have attained the status of established conventions. Surveying the spiritual odyssey and socio-cultural milieu of these directors throughout the 20th century, one discerns that they grappled with disparate historical imperatives, pursued divergent artistic ideals, and fashioned distinct cinematic personas. Yet, amidst this tapestry of variation, one common thread emerges as their unifying essence: the narrative of the rural heartland. It lies concealed at the very core of their artistic identities, resonating as the most profound "root" amidst the multiplicity of their individual endeavors.

How do non-family CEOs influence family firm innovation performance?

PurposeWhile the relationship between non-family CEOs and corporate innovation in China has been widely studied, the results remain inconclusive. This study explores the relationship between non-family CEOs and corporate innovation in the context of intergenerational succession. It considers the background and background characteristics of non-family CEOs in an attempt to provide a theoretical foundation for human resource management and innovative strategic management that can be applied in the transformation of family companies.Design/methodology/approachThe authors develop, then test, a series of hypotheses using an econometric analysis of a large sample of Chinese listed family firms. To control for endogeneity problems, such as missing variables in the model and the selectivity bias of the sample, propensity score matching (PSM) model is applied to analyze the panel data of 452 listed family firms from 2009–2019.FindingsThis study first validates the mechanism by which non-family CEO background characteristics affect innovation performance in family firms. It then reveals the varying moderating effects of two stages of intergenerational succession (i.e. later-generation participation in management and later-generation take-over management) that influence the relationship between non-family CEOs and corporate innovation.Originality/valueThe study's findings based on upper echelon and imprinting theory complement and extend existing research by revealing the impact of non-family CEOs from different backgrounds, and also identifying the role of intergenerational succession in the relationship between non-family CEO background characteristics and innovation performance.

Do State Ownership Imprints Affect Innovation in Family Firms? The Estimation and Inference of a Panel Model with a Time Trend

In the realm of China’s bustling economy, a fascinating dynamic exists between family businesses and state-owned enterprises, characterized by a symbiotic relationship and collaboration. Many family firms today originate from state-owned enterprises. Hence, their earlier ownership institution can influence privatized family firms. However, the impact of this privatization on long-term strategic orientation is not clear. This study endeavors to shed light on this complex matter through meticulous examination, employing estimation and inference techniques through the use of a panel model with a discernible time trend. Combining both imprinting theory and institutional logic theory, this study finds that state ownership imprints intervene in the strategic outcomes of family firms: Privatized family firms induce a lower level of innovation as compared to non-privatized family firms. This research also finds that intergenerational succession weakens this effect while the proportion of state-owned shares strengthens it. Robustness tests, utilizing the PSM method, have been conducted to validate the credibility and reliability of the findings obtained through this study. The findings of this research serve as a testament to the ever-evolving dynamics and interconnectedness prevalent within the intricate tapestry of China’s economic landscape.

Investment in innovation and international entrepreneurial performances of Chinese family businesses: from the perspective of intergenerational succession

ABSTRACT Innovation and international entrepreneurship are important paths for family businesses to achieve sustainable growth. However, there are few relevant studies on the development and inheritance of family businesses. This paper has taken China’s listed family businesses from 2007 to 2020 as a sample in order to explore how investment in innovation affects international entrepreneurial performances. The study found that family businesses with high investments in innovation had lower international entrepreneurial performances. When family businesses are inherited by the firstborn or managed by multiple generations, the degree of this negative impact will increase, while heirs with overseas work experience will reduce the negative impact. The gender and overseas educational experience of the heirs will not have an impact on the negative relationship. These findings emphasize the heterogeneous role of intergenerational succession, revise some traditional inheritance views of Chinese family businesses and reveal the important role of reasonable intergenerational succession strategies in coordinating innovation and international entrepreneurship.

Ghassān Kanafānī’s Children: Agency and Contingency

Abstract One of the major premises of Arab (post)colonial modernity is that the child could be a key bearer of change for a better future for the society. For the child to be successful as a bearer of change, she must first be transformed into a modern subject. In this article, I present the Palestinian case to explore this premise, examining the nature of the child as a modern subject with a particular type of agency. Specifically, I will focus on how Ghassān Kanafānī’s literary works represent the child as a sociopolitical agent. I analyze several literary genres, including dedications, letters, short stories, and novels. The article concludes by suggesting that this particular agency is a hybrid of child-adult agency, bounded by intergenerational succession in the context of patriarchal-colonial Palestine of the post-Nakbah era.

Asset specificity and farmers’ intergenerational succession willingness of apple management

Understanding the factors behind apple farmers’ willingness to pass on the management of their farms to their descendants is crucial to the continuity of apple production. Due to the high specificity of the human capital, physical assets, land assets, and geographical location in apple production, this study used a binary logistic regression and a mediating effect model to explore the impact of asset specificity on farmers’ intergenerational succession willingness of apple management (FISWAM) and to examine the mediating effects of loss aversion in the impact of asset specificity on the FISWAM. The results showed that about 18.68% of the respondents expressed willingness to transfer their apple business between generations, and the FISWAM was generally weak. In addition to the negative impact of geographical location specificity (GLS), human capital specificity (HCS), physical assets specificity (PAS), and land assets specificity (LAS) can enhance the FISWAM. Loss aversion plays a partial mediating role in the impact of PAS, LAS, and GLS on the FISWAM.

Analysis on the Allocation of Control Right of Intergenerational Inheritance of Family Enterprises in the New Era

Artificial intelligence (AI) is the primary tool used by businesses to enhance economic advantages. Family company management is undergoing information and the digital industrial revolution because of artificial intelligence. With the fast development of new technologies, the family company management style has a significant effect and previously unimaginable impact. For most enterprises, intergenerational succession is either taking place or will occur shortly. Here intergenerational inheritance significance for family-owned businesses (IISF-OB) has been proposed to solve family company performance and the internal action mechanisms. Intergenerational succession pathways deserve consideration, and research for the family businesses must utilize artificial intelligence technology to enhance related work. The proposed method investigates how family company management modes can be innovated to fulfill societal development requirements methods in artificial intelligence. It will use case studies, comparative analyses, and develop a new solution.

Promote or inhibit: State-owned equity participation and family firms’ innovation investment

Targeting A-share listed family firms on the Shanghai and Shenzhen Stock Exchange, this study focuses on the special situation of state-owned equity participation in non-state-owned enterprises. Specifically, we explore the relationship between state-owned equity participation, intergenerational succession in family firms, and innovation investments. The results reveal a prominent “double-edged sword” effect of state-owned equity participation on family firms; that is, there is a reversed U-shaped relationship between shareholding proportion and innovation investment. To some extent, the intergenerational succession of family firms moderates the reversed U-shaped relationship. Moreover, the double-edged sword effect of state-owned equity is more prominent in family businesses that are created by the entrepreneur from scratch. Compared to existing research arguing for the linear relationship between state-owned equity participation and innovation investment by enterprises, we reveal the impact of the excessive supervision effect arising from the increase in state-owned equity holdings on family firms’ innovation. This study confirms the double-edged sword effect of state-owned equity participation in family firms and further explores the influence of intergenerational succession and the heterogeneity of family firms on such an effect. By revealing the double-edged sword effect of state-owned equity holdings, this study enriches the research on the participation of private enterprises in mixed-ownership reform.

The Process of the Intergenerational Succession of Leadership in a Family Business

Background and objective: In this paper, we explore first-generation leadership succession in family businesses which, despite extensive literature on the subject, remains insufficiently understood. Our goal is to acquire new knowledge and understanding regarding this phenomenon with a view to making it more effective.