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Origin matters: Institutional imprinting and family firm innovation in China

Author

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  • Cheng, Chen
  • Li, Wanrong
  • Liu, Guanchun
  • Liu, Yuanyuan

Abstract

During the early 1990s, a swathe of small state-owned enterprises (SOEs) was privatized as family businesses in China. This paper examines whether and how the origin (i.e., restructured vs. entrepreneurial) of family firms affects corporate innovation. Using the data of Chinese family firms from 2009 to 2018, we find that restructured family firms generate fewer patents generally than entrepreneurial family firms, but create more high-quality patents than their entrepreneurial counterparts. This effect is more pronounced for those family firms which had formerly been SOEs for a more extended period, without generational succession, and previously controlled by governments entirely. Further mechanism tests show that restructured family firms have a higher likelihood of hiring professional managers, are subject to less intervention from family members, and have fewer informal hierarchies, providing direct evidence for the institutional imprinting channel. Our findings suggest that the institutional imprint underlying the origin of family firms can be critical to their innovation decisions.

Suggested Citation

  • Cheng, Chen & Li, Wanrong & Liu, Guanchun & Liu, Yuanyuan, 2023. "Origin matters: Institutional imprinting and family firm innovation in China," Emerging Markets Review, Elsevier, vol. 55(C).
    • Handle: RePEc:eee:ememar:v:55:y:2023:i:c:s1566014122001078
    DOI: 10.1016/j.ememar.2022.100990
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    Cited by:

    1. Wang, Shengbin & Jin, Junheng & Li, Haoze, 2023. "Family nonexecutive directors, professional managers, and investment in family firms," Finance Research Letters, Elsevier, vol. 58(PD).

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    More about this item

    Keywords

    Family firm origin; Corporate innovation; Institutional imprinting; China;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M11 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Production Management

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