How does an intra-family succession effect strategic change and performance in China’s family firms?

Abstract

Motivated by the sparse literature on succession dynamics in China and other transitional markets we consider the effects of initiating an intra-family leadership succession on firm strategic change and performance on a sample of publicly listed family firms from China. Grounded in upper echelons theory we find that the initiation of a succession process leads to significant strategic change. Based on generational differences between founders and successors we find the succession-strategic change relationship is positively moderated by a successor’s international education. We also consider the strategic change to performance relationship.

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Fig. 1

Notes

  1. 1.

    To test our family firm ownership definition (i.e., 25% direct or indirect ownership rights) we reran the models with a more liberal 20% cut-off. By doing so we enlarged the panel but the results (available from the authors) remain unchanged.

  2. 2.

    Elite education is coded on a five-point scale based upon successors’ final university attended. EE = 1, means a successor attended a top 100 global university; EE = 2, means a successor attended a “211” or “985” university in China—these are the top Chinese universities as designated by China Education Department; EE = 3, means a successor attended a foreign university that is outside of the top QS 100 world rankings; EE = 4, means a successor attended a Chinese general university out of the list of “211” and “985” designated by the China Education Department; EE = 5, means a successor has not attended university.

    Education level is coded on a three point scale. EL = 1, denotes a successor has some postgraduate education; EL = 2 some undergraduate education; EL = 3 means no university education has been attempted.

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Acknowledgements

This research is funded by Chinese National Natural Science Foundation, project number 71472176 and 71372200; and also funded by Renmin University of China Research Foundation, project number 2017030057. The second author also acknowledges the financial support of the Canadian Social Science and Humanities Research Council Award number 890-2014-0098.

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Zhao, J., Carney, M., Zhang, S. et al. How does an intra-family succession effect strategic change and performance in China’s family firms?. Asia Pac J Manag 37, 363–389 (2020). https://doi.org/10.1007/s10490-018-9568-x

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Keywords

  • Family firms
  • Strategic change
  • Succession
  • Foriegn education
  • Performance