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The role of founder reign in explaining family firms' R&D investment: evidence from China

Xi Zhong (Guangdong University of Technology, Guangzhou, China)
Tiebo Song (South China University of Technology, Guangzhou, China)
Liuyang Ren (South China University of Technology, Guangzhou, China)

European Journal of Innovation Management

ISSN: 1460-1060

Article publication date: 10 September 2021

Issue publication date: 8 March 2023

537

Abstract

Purpose

Based on the socioemotional wealth theory, this study aims to empirically investigate how founder reign, that is a founder serving as a cheif executive officer (CEO) or chairman, influences family firms' research and development (R&D) investment in emerging economies (e.g. China).

Design/methodology/approach

This study empirically tested the hypotheses based on a sample of listed Chinese family companies from 2008 to 2018.

Findings

Founder reign has a negative impact on family firms' R&D investment. Particularly, the negative impact of the founder serving as chairman on family firms' R&D investment is larger than the negative impact of the founder serving as CEO on family firms' R&D investment. Founder's military experience weakens the negative impact of founder reign on family firms' R&D investment, but founder's executive master of business administration (E)MBA experience has no moderating effect on this relationship.

Originality/value

First, the authors contribute to the family firm innovation literature by providing an alternative but complementary explanation of why family firms have relatively low R&D investment levels. This research shows that founder reign is a key reason for family firms in China eschewing R&D investment. Second, by incorporating the founder serving as CEO and the founder serving as chairman into the analytical framework, and then examining their impact on family firms' R&D investment, our research helps us to fully understand the impact of founder reign on firm strategic actions. Third, we contribute to the “founder reign-firm strategic actions” framework by revealing how founders' human capital profoundly affects the relationship between founder reign and family firms' R&D investment.

Keywords

Acknowledgements

The authors are grateful to the financial support from the Social Science Foundation Project of China (Grant No. 20BGL103).

Conflict of interest statement: None

Citation

Zhong, X., Song, T. and Ren, L. (2023), "The role of founder reign in explaining family firms' R&D investment: evidence from China", European Journal of Innovation Management, Vol. 26 No. 2, pp. 422-445. https://doi.org/10.1108/EJIM-01-2021-0068

Publisher

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Emerald Publishing Limited

Copyright © 2021, Emerald Publishing Limited

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