Family Control,Second-generation Involvement And Innovation Strategy Choices In Family Firm

Innovation is an inevitable requirement for family firms to enhance their competitiveness and built to last.However,the existing literature on family firm innovation is still devoted to the discussion of internal R&D,ignoring the important innovation strategy of external technology acquisition,which leads to the research can not provide effective theoretical guidance for family firms to deal with the innovation challenges.This deviation triggers my interest in family firm’s external technology acquisition behavior.At the same time,while family firms in China are in the peak of intergenerational succession,how to deal with the dual challenges from inheritance and innovation is also a difficult problem in front of family firms.Therefore,our research also focuses on the succession situation and explores the influence of second-generation involvement on external technology acquisition behavior.In view of this,around the issue of external technology acquisition in family firms,in order to explore the driving mechanism,our research attempts to solve three core questions:(1)Why family control lead to family firms prefer external technology acquisition more?(2)Will family control affect the choices of external technology acquisition mode in family firms? What is the logic behind it?(3)Why the second-generation involvements reduce the preference of family firms to external technology acquisition?In order to answer the above questions,based on socio-emotional wealth theory,resource-based view and transaction cost theory,our research designed and carried out three studies and tested the hypothesis based on the data of family listed companies from2007 to 2017.The results show that:(1)Family control is an important driving factor that causes family firms to favor external technology acquisition.At the same time,performance expectation gap may make family firms turn to internal R&D to some degree.Besides,the technical background of family members enhances the flexibility of family firm’s internal and external technology acquisition decisions.(2)Family control is also an important reason for family firms to choose technology M&A as an external technology acquisition mode.The internal and external governance of family firms(e.g.pyramid ownership structure,family political connection)help to increase the flexibility in the choices of external technology acquisition mode.(3)In the context of succession,different from the influence of family control on internal and external technology acquisition decisions,second-generation involvement profoundly changes the logic of family firm’s innovation strategy choices,which is shown as the attractiveness of internal R&D increases while the attractiveness of external technology acquisition decreases.In addition,performance expectation gap restrains the adoption of external technology acquisition,while second-generation technology background plays a crucial role in improving the flexibility of family firm’s innovation strategy decision.The potential theoretical contributions include four aspects: First,we introduce external technology acquisition into the research framework of family firm innovation strategy choices,and analyze the influence mechanism of family governance factors(family control,second-generation involvement)on internal and external technology acquisition decision,which promotes and accelerates the process of research on the antecedents of internal and external technology acquisition decision in family firm.Second,few existing researches have given the influence mechanism of governance on external technology acquisition mode.Based on family control,our research explores the logic of family governance on family firm’s innovation strategy choices and provides empirical evidence from the innovation field for the research conclusion that "family governance is the decisive factor of family firm’s heterogeneous decisionmaking or behavior".Third,the introduction of family firm’s theory.When explaining the decision-making of family firm’s internal and external technology acquisition and the choices of external technology acquisition mode,resource-based view and transaction cost theory cannot reveal the "economic irrationality" behavior of family firm’s innovation strategy choices from the non-economic perspective.The introduction of socio-emotional wealth theory is helpful to analyze the logic of family firm innovation strategy choices,especially the non-economic logic.This theoretical attempt also helps to identify the completely different influence mechanisms of family control and second-generation involvement on the internal and external technology acquisition decisions,which is of great benefit to deepen and enrich the research on family firm’s innovation strategy choices.Fourth,the refinement and consideration of core concepts.On the one hand,the use of family control in current literature is haphazard and chaotic,reflecting our insufficient attention to the differentiation of family control types.In our research,combining with the research questions,we define the family control type as strategic control,rather than ownership control or operational control.While promoting the study of family control,it also effectively avoids the interference of other family control types on the theoretical demonstration.On the other hand,the existing research of external technology acquisition mode often focus on technology alliance or technology M&A,which lack of overall consideration of the two common external technology acquisition modes.When discussing the influence of family control on the external technology acquisition mode,our research includes both of two modes into the analytical framework,which not only promotes the study of external technology acquisition mode,but also helps to strengthen our cognition and grasp of the difference between technology alliance and technology M&A.