Second generation involvement and corporate innovation: evidence from China

Haijie Huang, Changjiang Lyu and Xiaowen Zhu

Nankai Business Review International, 2019, vol. 10, issue 4, 526-545

Abstract: Purpose - The purpose of this paper is to study the effect of second generation involvement on corporate innovation in Chinese family firms. Design/methodology/approach - Based on the manually collected sample of listed Chinese family firms from 2003 to 2014, the study empirically examines the impact of second generation involvement on corporate innovation. The authors apply a difference-in-differences research design and a Heckman two-stage least squares regression to relieve the endogeneity concerns. Findings - The research finds a positive relationship between second generation involvement and corporate innovation. This effect is more pronounced among the firms appointing second generation family members with overseas training experience and firms with weak external monitoring. Further analysis shows that the curtailment of related party transactions and the improvement of accounting information quality are important channels. Practical implications - The findings provide several practical implications for Chinese family firms to survive the succession process and maintain competitive advantages across generations. Originality/value - First, this study is helpful to understand the strategies adopted by family firms to maintain their long-term competitiveness and pursue continuing growth across generations. Second, the findings are also consistent with the transfer cost hypothesis of Fanet al.(2012) and Bennedsenet al.(2015). Finally, the findings imply that second generation involvement has a substitutive effect for external monitoring mechanisms.

Keywords: Family firms; Second generation involvement; Corporate innovation; Overseas training experience (search for similar items in EconPapers)
Date: 2019
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:nbripp:nbri-03-2019-0008

DOI: 10.1108/NBRI-03-2019-0008

Access Statistics for this article

Nankai Business Review International is currently edited by Dr Xuexiu Wang and Professor Li Wei'an

More articles in Nankai Business Review International from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().