Performance feedback, succession process and innovative activities of family firms: evidence from China

Family firms face difficult decisions between attention to long-term growth opportunities and stable intergenerational succession in the inheritance period, as reflected by these firms’ changes in emphasis on economic versus non-economic goals. Accordingly, the relationship between performance feedback and innovative activities of family firms is highly uncertain. Most previous studies on this relationship have ignored the heterogeneity in Chinese family firms’ development stages, especially during the critical intergenerational inheritance period. Based on performance feedback theory, this study examines Chinese-listed family firms with second-generation involvement from 2000 to 2018, focusing on the impact of performance feedback on innovation during succession. We identified significantly different impacts at each succession stage. This body of work therefore adds to the literature on intergenerational succession and provides details on the particularity of Chinese family firms from an investment perspective. We conclude that it is important for family firms facing the dual challenges of succession and innovation to critically identify opportunities to develop and grow their business while continuing their legacies.