The role of founder reign in explaining family firms' R&D investment: evidence from China
European Journal of Innovation Management
ISSN: 1460-1060
Article publication date: 10 September 2021
Issue publication date: 8 March 2023
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
:Emerald Publishing Limited
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