Confucianism, successor choice, and firm performance in family firms: Evidence from China

Mengyuan Chen, Jason Zezhong Xiao and Yang Zhao

Journal of Corporate Finance, 2021, vol. 69, issue C

Abstract: This study examines the nexus between Confucianism, the choice of the leadership successor, and firm performance in family firms in China. It provides original evidence that firm founders who are deeply influenced by Confucianism have a higher likelihood of choosing a family member or a guanxi-connected nonfamily member as the successor. Moreover, family/guanxi-connected successors have a positive effect on firm performance compared with their counterparts outside of the family/guanxi circle. One underlying reason is that, affected by Confucianism, only the family/guanxi-connected successors can acquire the founder's specialized assets via pre-succession internal managerial experience, which, in turn, enables them to outperform other successors.

Keywords: Family businesses; Leadership succession; Successor choice; Confucianism; Guanxi; Returnees; Firm performance; China (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (29)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:69:y:2021:i:c:s0929119921001449

DOI: 10.1016/j.jcorpfin.2021.102023

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