Intergenerational Succession And RDI In Family Firms

China is in a critical period of economic transformation.Innovation-driven economic development strategies have put forward higher requirements for the development of enterprises.The family firms,an important part of the private economy,invest insufficiently in innovation.It is significant to explore the reasons for this phenomenon.The differences among family businesses provide a good starting point to explain this phenomenon.In addition,after years of development,family firms have gradually started the intergenerational succession.The results of succession can have a significant impact on family firms.Therefore,it is meaningful to research the relationship between intergenerational succession and R&D investment intensity in family firms.This paper regards intergenerational succession as a long-term socialization process and divides the process into three stages:involvement stage,joint management stage,and mature succession stage.This paper applies three theories-Socioemotional Wealth,Myopic Loss Aversion and Authority Legitimacy-to explain the relationship between intergenerational succession and the R&D investment intensity of family firms,taking into account the regulatory role of the incumbent's authority.This paper adopts 5244 observations of 1239 Chinese A-share manufacturing family firms from 2011 to 2016.There are 1340 observations of 367 family firms that have entered the intergenerational succession process.This research makes two main conclusions.Firstly,family firms in the intergenerational succession period tend to reduce their R&D investment,and the R&D investment intensity of family firms in every succession stage is lower than that of family firms that have not started to succeed.Secondly,the differences in R&D investment intensity between family-owned companies in different succession stages and uninherited family companies are different.The incumbent's authority is one of the causes of these differences.In the involvement stage,the existence of the incumbent's authority will reduce the difference in R&D investment intensity between the inherited family firms and the uninherited family firms.In the joint management stage,the incumbent's authority will not significantly affect the difference in R&D investment intensity between the inherited family firms and the uninherited family firms.In the mature succession stage,the incumbent's authority will increase the difference in R&D investment intensity between the inherited family firms and the uninherited family firms.Overall,the greater the incumbent's authority is,the stronger the influence is.The research results of this paper have both theoretical significance and empirical significance.In terms of theoretical significance,based on the concept that intergenerational succession is a process,this research focuses on the R&D investment intensity of family firms in the succession period.It emphasizes the influence of intragroup differences of family firms on the decision-making of family firms,responding to the appeal to place importance on the intragroup differences.In addition,this paper uses the "Deconstructuring Socioemotional Wealth" to explain the R&D investment decisions in family firms,expanding the applicable context of"Deconstructuring Socioemotional Wealth".When it comes to empirical significance,the discussion of the relationship between intergenerational succession and R&D investment intensity can provide decision-making guidance for decision-makers of family firms.Incumbents can make succession plans in advance according to their different pursuits of“succession goal”and“innovation goal".The plan will enable the family business to develop steadily.What's more,the interpretation of the role of incumbent's authority and its working mechanism will enable family business incumbents to have a clear understanding of themselves,and proactive incumbents will be able to advance the process of intergenerational succession and help successors get authority quickly.