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<p>Innovation serves as a critical driver of long-term growth in family businesses, particularly during generational succession, where the strategic decisions of second-generation successors significantly shape corporate innovation trajectories. This study examines listed family firms on China’s A-share market from 2004 to 2019, investigating how second-generation involvement at distinct stages (entry into management, CEO appointment, and chairmanship succession) influences R&amp;D expenditures. The results reveal a nonlinear relationship: R&amp;D expenditures initially decline when successors join management but rebound as they assume CEO roles with greater managerial authority. However, innovation investment drops again after successors fully take over as board chairs. Further analysis shows that marketization, representing the development of the capital market and financial restrictions, influences the impact of the second generation’s involvement stages on innovation, especially before the succession is completed. Firms with weaker pre-succession performance tend to increase R&amp;D when second generation becomes CEO. Furthermore, direct ownership by second generation mitigates their post-succession aversion to innovation, fostering long-term competitiveness. This study underscores the imperative of strategic planning in family business succession. Policymakers should enhance market institutions (e.g., financing access and innovation incentives) to sustain innovation during transitions. For family firms, gradual power transfer, pre-succession equity alignment for successors, and innovation safeguards during interim leadership phases are vital. Founders must also cultivate successors’ strategic capabilities to ensure intergenerational resource optimization and sustainable growth.</p>

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Entrepreneurial innovation dynamics and intergenerational succession in Chinese family firms

  • 期刊论文

  • 发表日期：

    2026年2月24日

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  • Xuan Liu,
  • Bing Zhou

摘要

Innovation serves as a critical driver of long-term growth in family businesses, particularly during generational succession, where the strategic decisions of second-generation successors significantly shape corporate innovation trajectories. This study examines listed family firms on China’s A-share market from 2004 to 2019, investigating how second-generation involvement at distinct stages (entry into management, CEO appointment, and chairmanship succession) influences R&D expenditures. The results reveal a nonlinear relationship: R&D expenditures initially decline when successors join management but rebound as they assume CEO roles with greater managerial authority. However, innovation investment drops again after successors fully take over as board chairs. Further analysis shows that marketization, representing the development of the capital market and financial restrictions, influences the impact of the second generation’s involvement stages on innovation, especially before the succession is completed. Firms with weaker pre-succession performance tend to increase R&D when second generation becomes CEO. Furthermore, direct ownership by second generation mitigates their post-succession aversion to innovation, fostering long-term competitiveness. This study underscores the imperative of strategic planning in family business succession. Policymakers should enhance market institutions (e.g., financing access and innovation incentives) to sustain innovation during transitions. For family firms, gradual power transfer, pre-succession equity alignment for successors, and innovation safeguards during interim leadership phases are vital. Founders must also cultivate successors’ strategic capabilities to ensure intergenerational resource optimization and sustainable growth.