Stay in hometown or go elsewhere: Clan culture and the cross-regional expansion of family firms

Lin Tan, Dong Lu and Jiangtao Liu

Pacific-Basin Finance Journal, 2025, vol. 92, issue C

Abstract: Breaking down barriers to local factor allocation and market segmentation is conducive to the expansion of enterprises to achieve economic benefits. In this context, exploring the role that clan culture plays in the process of factor allocation holds practical significance. Using family firms listed on the Shanghai and Shenzhen stock exchanges from 2008 to 2022 as a sample, this paper analyzes the relationship between clan culture and the cross-regional expansion of enterprises. The study finds that (1) clan culture significantly inhibits the willingness of family firms to engage in cross-regional expansion, and (2) the specific mechanisms of this inhibitory effect include risk aversion, limited capital stock, and special trust. In addition, the intensity of competition in the industry where the enterprise operates, a well-developed market environment, the involvement of the second generation, and the governance effect of institutional investors in equity holdings all help to mitigate the inhibitory effect of clan culture on the cross-regional expansion of enterprises. Our study provides an in-depth exploration of the mechanism through which clan culture inhibits the cross-regional expansion of family firms.

Keywords: Clan culture; Cross-regional expansion; Risk aversion; Special trust (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:92:y:2025:i:c:s0927538x25000988

DOI: 10.1016/j.pacfin.2025.102761

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