Confucianism, successor choice, and firm performance in family firms: Evidence from China

Mengyuan Chen; Jason Zezhong Xiao; Yang Zhao

doi:10.1016/j.jcorpfin.2021.102023

Confucianism, successor choice, and firm performance in family firms: Evidence from China

Mengyuan Chen, Jason Zezhong Xiao, Yang Zhao

Research output: Contribution to journal › Article › peer-review

56 Citations (Scopus)

Abstract

This study examines the nexus between Confucianism, the choice of the leadership successor, and firm performance in family firms in China. It provides original evidence that firm founders who are deeply influenced by Confucianism have a higher likelihood of choosing a family member or a guanxi-connected nonfamily member as the successor. Moreover, family/guanxi-connected successors have a positive effect on firm performance compared with their counterparts outside of the family/guanxi circle. One underlying reason is that, affected by Confucianism, only the family/guanxi-connected successors can acquire the founder's specialized assets via pre-succession internal managerial experience, which, in turn, enables them to outperform other successors.

Original language	English
Article number	102023
Number of pages	21
Journal	Journal of Corporate Finance
Volume	69
Early online date	29 Jun 2021
DOIs	https://doi.org/10.1016/j.jcorpfin.2021.102023
Publication status	Published - 1 Aug 2021

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10.1016/j.jcorpfin.2021.102023Licence: Unspecified

Confucianism successor performance final versionAccepted author manuscript, 608 KBLicence: CC BY-NC-ND

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title = "Confucianism, successor choice, and firm performance in family firms: Evidence from China",

abstract = "This study examines the nexus between Confucianism, the choice of the leadership successor, and firm performance in family firms in China. It provides original evidence that firm founders who are deeply influenced by Confucianism have a higher likelihood of choosing a family member or a guanxi-connected nonfamily member as the successor. Moreover, family/guanxi-connected successors have a positive effect on firm performance compared with their counterparts outside of the family/guanxi circle. One underlying reason is that, affected by Confucianism, only the family/guanxi-connected successors can acquire the founder's specialized assets via pre-succession internal managerial experience, which, in turn, enables them to outperform other successors. ",

keywords = "Family businesses, Leadership succession, Successor choice, Confucianism, Guanxi, Returnees, Firm performance, China",

author = "Mengyuan Chen and Xiao, {Jason Zezhong} and Yang Zhao",

note = "Funding Information: Jason Xiao acknowledges financial support from the National Natural Science Foundation of China (No. 71872179 , 71862036 , 71502122 ) and a start-up grant from University of Macau ( SRG2019-00191-FBA ). Publisher Copyright: {\textcopyright} 2021 Elsevier B.V. Copyright: Copyright 2021 Elsevier B.V., All rights reserved.",

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doi = "10.1016/j.jcorpfin.2021.102023",

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T1 - Confucianism, successor choice, and firm performance in family firms

T2 - Evidence from China

AU - Chen, Mengyuan

AU - Xiao, Jason Zezhong

AU - Zhao, Yang

N1 - Funding Information: Jason Xiao acknowledges financial support from the National Natural Science Foundation of China (No. 71872179 , 71862036 , 71502122 ) and a start-up grant from University of Macau ( SRG2019-00191-FBA ). Publisher Copyright: © 2021 Elsevier B.V. Copyright: Copyright 2021 Elsevier B.V., All rights reserved.

PY - 2021/8/1

Y1 - 2021/8/1

N2 - This study examines the nexus between Confucianism, the choice of the leadership successor, and firm performance in family firms in China. It provides original evidence that firm founders who are deeply influenced by Confucianism have a higher likelihood of choosing a family member or a guanxi-connected nonfamily member as the successor. Moreover, family/guanxi-connected successors have a positive effect on firm performance compared with their counterparts outside of the family/guanxi circle. One underlying reason is that, affected by Confucianism, only the family/guanxi-connected successors can acquire the founder's specialized assets via pre-succession internal managerial experience, which, in turn, enables them to outperform other successors.

AB - This study examines the nexus between Confucianism, the choice of the leadership successor, and firm performance in family firms in China. It provides original evidence that firm founders who are deeply influenced by Confucianism have a higher likelihood of choosing a family member or a guanxi-connected nonfamily member as the successor. Moreover, family/guanxi-connected successors have a positive effect on firm performance compared with their counterparts outside of the family/guanxi circle. One underlying reason is that, affected by Confucianism, only the family/guanxi-connected successors can acquire the founder's specialized assets via pre-succession internal managerial experience, which, in turn, enables them to outperform other successors.

KW - Family businesses

KW - Leadership succession

KW - Successor choice

KW - Confucianism

KW - Guanxi

KW - Returnees

KW - Firm performance

KW - China

UR - http://www.scopus.com/inward/record.url?scp=85110195849&partnerID=8YFLogxK

U2 - 10.1016/j.jcorpfin.2021.102023

DO - 10.1016/j.jcorpfin.2021.102023

M3 - Article

VL - 69

JO - Journal of Corporate Finance

JF - Journal of Corporate Finance

SN - 0929-1199

M1 - 102023

ER -

Confucianism, successor choice, and firm performance in family firms: Evidence from China

Abstract

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