The Research Of The Effect Of Intergenerational Succession On The Family Firm’s Innovation

Chinese market economy develops rapidly since the Reform and Opening-up policy. As the dominant force, Chinese private enterprises play an important role in this progress, and among the private enterprises the family enterprises carry great importance and weight. The study of family enterprises continues gaining much focus because of the specificity of the family enterprises in aspect of the culture and goals which results in their unique operation behaviors. At present, the majority of the Chinese family enterprises are facing or experiencing the important stage of intergenerational succession, and the mode of succession is mainly the so-called "Father to Son". However, the son generation and father generation differ from their growth environment, business ideas and values, thus the distinction of the means of corporate governance. People now pay much attention to whether the son generation can create more value for the the family enterprises.Meanwhile, a lot of research shows that improving the ability of innovation is the main approach for the enterprises to deal with the market challenges and keep sustainable. Currently the relationship between the intergenerational succession and corporate innovation, however, is not concerned much in academia. Therefore, this paper which pays attention to the issue has great theoretical and practical significance.The content of this paper includes six parts. The first part is introduction, including the research background, the research significance, the research frame and the innovative points of this research. The second part is the literature review concerning the conceptions of family enterprises, intergenerational succession and the technology innovation, etc. This part first discusses the definition and the means of classification of family enterprises and we put emphasis on the Socioemotional Wealth Theory in family firms, laying the foundation of the empirical analysis. Secondly, this part concludes the definition, content and modes of intergenerational succession. Thirdly, this part discusses the evolution of the technology innovation theories and the factors affect corporate technology innovation. The third part of this paper is the theoretical analysis and hypothesizing. Based on the theoretical analysis above and from the perspective of the Socioemotional Wealth Theory, this part proposes the interrelation between intergenerational succession and the corporate technology innovation. The fourth part ofthis paper is the design for the empirical research, including the selection of samples,the collection of data, the definition of the variables and the construction of the mathematical model. The fifth part of this paper is the analysis of the empirical results,including descriptive statistics, correlation analysis, and multiple regression analysis and robustness test. The last part of this paper is the conclusion and suggestion including the main conclusion from this research, the practical significance, the limitations and the prospects of relative research.Through the empirical research on the data of 404 A-share listed family enterprises from year 2012 to 2014, this paper obtains the following conclusions. The intergenerational succession includes three phases the phrase of "Involvement",“Co-management" and "Takeover". "Involvement" refers to the situation that the son generation enters the management layer, make the non-critical decisions and involve in the daily management of the enterprises. "Co-management" refers to the situation that the father generation and son generation make decisions and operate the enterprises together. This research shows that when the enterprises are in this two phrases mentioned above, it will has significant negative effect on the investment of R&D of the enterprises. This conclusion corresponds to the hypothesis we pose. "Takeover" refers to the situation that the son generation takes over the position of the chairman of the board from their father generation and is in charge of the corporate overall management independently. When the enterprises are in this phrase, the empirical result shows that"Takeover" has no significant positive effect on the investment of R&D of the enterprises which contradicts the hypothesis we pose. This result may be induced by the problem of the data bias and the limitation of samples. This paper hasn’t proved,empirically, that the phrase of "Takeover" in intergenerational succession can affect the R&D investment, however the theoretical analysis of this part can contribute to the further research.In general, this paper has found some relationship between the phrases in intergenerational succession and the investment of R&D in family enterprises. The findings extend the research on three phrases model of intergenerational succession in family enterprises. Furthermore, this research attempts to construct the model which can explain the relationship between the intergenerational succession and the investment of R&D. Some hypothesis is proved by the empirical data based on this model. This paper also provides the research idea and research frame concerning the relationship between intergenerational succession and innovation in family enterprises. Further studies can becontinued based on this paper. For instance, we can study how the families protect the socioemotional wealth in the stage of intergenerational succession; We can discuss how the intergenerational succession affects the speed and intensity of R&D in the case of personal influence in family enterprises; We can study that how the intergenerational succession influences other forms of innovation such as business model innovation, etc.