Family Inheritance And Corporate Diversification Strategy

As an important private profit-organization form in China,family business is an important driving force for China's economic development.At present,family-owned enterprises are in a new era of strategically targeting on goals of inter-generational inheritance and entrepreneurial transformation and upgrading.Since both goals,the inter-generational inheritance and entrepreneurial transformation and upgrading,are inseparable,it would be an effective way to deeply understand the relationship between them by carrying out research on strategic decision-making during the inheritance period.The strategic choice of the family business in inheritance stage not only shows the family heirs' intuitive understanding and thinking about the future industrial strategy,but also reflects the process how the heirs inheriting and continuing the entrepreneurial spirit from the last generation.Based on the current fact that Chinese family business are in the inter-generational inheritance stage and theories of Socioemotional Wealth(SEW),Authoritative Legitimacy,Differential Pattern and Upper Echelons,this paper will start from the perspective of inter-generational entrepreneurship of family business,to futher discuss the influence of the implementation result in corporate diversification strategy,with the involvement of family's second generation in management,and the adjustment role of the second generation character identity in the relationship between the the inter-generational inheritance of family business and the implementation of corporate diversification strategy.This paper takes China's A-share listed family enterprises from 2003 to 2016 as research samples which involve a total of 9,527 observations of 1,657 listed family-owned enterprises.Among them,there are 1,442 observations from 321 listed family-owned enterprises entering the inter-generational inheritance stage.The regression model validates the corresponding research hypotheses.The empirical research finds that:(1)the inter-generational inheritance of family business does not play a conducive role in the implementation of corporate diversification strategy.However,the inter-generational inheritance of family business is a long-term socialization process.With the second generation of the family involved in management at a higher level,they will have different attitude of their risk preference in different inheriting stages and are more inclined to make diversified strategic decision due thesome motives,like achieving the establishment of authoritative legitimacy,and the long-lasting of family enterprise etc.(2)Based on the Differential Pattern Theory and the Upper Echelons Theory,the heirs with “son or daughter” status tend to make long-term strategic decisions,which positively regulates the relationship between the inter-generational inheritance and diversification strategies.Yet,the second generation with overseas education background tends to have a lower risk specialization strategy,which has a reverse adjustment effect on the relationship between inter-generational inheritance and diversification strategies.(3)Further study finds out that the uncertainty of the inter-generational inheritance will affect the attitude of the second generation to risk preference,showing a lower level of risk-taking;in addition,it also verified that the family-based enterprise in inter-generational inheritance stage will mainly focus on helping and training the heirs,while chasing short-term returns will be placed in second,or even at the expense of business performance.At present,the inter-generational inheritance and strategic transformation and upgrading of family enterprises in China play an important role in promoting China's social and economic development.By combining the characteristics of the second generation identity,this paper analyzes the process of the inter-generational inheritance and the relationship between the management level of heirs in enterprises and the diversification strategies,in hopes of providing some new ideas for future research of inter-generational inheritance,strategic choice making and long-lasting of the family business;and also in hope of putting forward some countermeasures and suggestions for the smooth advancement of the inter-generational process of family business.