Investing Nature Of Successors And Growth Of Family Business: An Empirical Study In China

Family businesses exist around the world and play a very important role on the economic development of countries. According to statistics, the number of employees in family businesses accounted for 60% of U.S. employees, 50% of GDP. German family business employees accounting for 75% of the total number of employees, output value reached 66%. According to expert estimates, the family businesses took a higher proportion in developing countries. The family controlled enterprises in China restored and developed since the critical economical turning point of 1978. May 20, 2010, the National Federation Vice Zhuang Congsheng said, according to estimates, family businesses accounted for more than 95% of china's private enterprises. The family business has become a national force to be reckoned with.The most enterprises of family controlled in the next ten years are facing the handover of power, and the practical problems which is urgent for family business to solve is how to break "the rich, but three generations". The extant literature suggests that in the succession process choosing an appropriate successor be the upmost important. Guided by this perspective, the study was executed with the aim to explore the key features of successors in the context of Chinese family firms. A quantitative survey was implemented in Hebei Province in China. Sampled family businesses were selected from the services, transportation, construction, commercial distribution, and wholesale and retail industries. A total of 250 questionnaires were posted to owners or senior managers of family businesses and 213 responses were received, leading to a response rate of 85.2%. Among the received questionnaires,200 copies were valid and 13 responses were either incomplete or not answered. Statistical analysis suggests that key features demonstrated by successful successors include managerial capability, loyalty to the family, alignment of personal beliefs to the corporate values, and willingness to take over the firm. The insights developed by this exploration will broaden the knowledge landscape of family firms in the emerging economy and allow us to better understand how family firms can survive and prosper in the competitive market.