Entrepreneur's Social Capital And Succession Intention

Family firms are not only ubiquitous and numerically dominant all around the world,but also the indispensable backbone for promoting the Socialist Economy with Chinese Characteristics.Since the reform and opening up,most of the founders of Chinese first-generation family-owned businesses are close to retirement now,which means succession has become a crucial and extremely urgent issue for Chinese family firms.During succession process,the founders' and the successors' intentions of inheritance serve as a necessary prerequisite.Taking into consideration of the Chinese traditional concept of "family culture"and external and internal agency risks,founders of our country's family firms are more willing to choose their children as successors.As a result,when talking about family firms'succession intention,we usually refer to the founders' pass will and their offspring's success will.In recent years,Chinese government has continuously deepened the reform of economic system and sought to provide a fair market environment for all types of ownership.But at present,our country is still in the period of economic transition with imperfect formal system,which has made family-owned economy suffer from some uncertainty.Entrepreneur's social capital,a special intangible asset built on the founders' own personal network,can serve as an informal institutional arrangement to make up for the lack of formal one and help family-owned enterprises to gain unique competitive advantages for sustained development.Taking into account the current external environment conditions,the urgent situation of intergenerational inheritance and the important role of entrepreneur's social capital,and based on the Resource-based Theory,entrepreneurs that already have established this kind of special asset will try their best to preserve its value in family firms.However,entrepreneur's social capital is different from other standardized assets.Its private property attribute makes it hard to transfer this special asset from one person to the other.So in order to maximally conserve entrepreneur's social capital and its value,families need to think twice before determining their successors.That is to say,entrepreneur's social capital can affect the determination of succession intention,but for now there is no empirical analysis and reasonable explanation for this possible relationship in China.Therefore,using data from the 9th Chinese Private Enterprise Survey,this paper investigates the impact of entrepreneur's social capital(which is measured by political identity and association relationship)on succession intention(which is measured by the founders' pass will and their offspring's success will)by Probit regression model.Meanwhile,considering the current reality faced by Chinese family firms,this paper select several individual,family and regional factors as moderators to conduct some further studies.The empirical results show that entrepreneur's social capital is positively correlated to Chinese family firms' succession intention.In addition,the founder's identity of NPC and CPPCC members has a greater effect on succession intention;but there is no significant difference between the two types of association relationship,one is led by the government and the other is led by All-China Federation of Industry and Commerce.What is more,the age of the founders and the proportion of family shareholders can to some extent strengthen the positive relationship between entrepreneur's social capital and succession intention,while local family concept weakens such a relationship between political identity and succession intention.The contribution of this paper lies in the following aspects.Firstly,it reveals the promoting effect of political identity and association relationship on the founders' pass will and their offspring's success,will,which not only makes entrepreneur's social capital a influencing factor of succession intention,but also provides empirical evidence for the applicability of existing foreign research findings in China.Secondly,it measures both entrepreneur's social capital and succession intention in two ways,and makes type segmentation of the former,which demonstrates a more comprehensive analysis.Thirdly,it analyzes the moderating effects of individual,family and local factors,which can help us have a clear and comprehensive understanding of factors influencing succession intention.Lastly,this paper's conclusion can help the founders and their families to make reasonable inheritance decisions and to build positive relationships with government,ensuring the smooth succession of Chinese family firms and thus promoting the development of national economy.