Path dependence and resource availability: Process of innovation activities in Chinese family and non-family firms

Eng, Li Li; Fang, Chevy-Hanqing; Tian, Xiaolin; Yu, Tong

doi:10.1016/j.ememar.2020.100779

Cited by 5 publications

(3 citation statements)

References 78 publications

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“…The values of cash-flow rights have been directly taken from CSMAR. The CSMAR database reflects the calculation of the cash-flow proportion of the family-controlled firms based on calculation methods ( Claessens et al, 1999 , 2000 ; La Porta et al, 1999 ). This study showed the examples below by Aslan and Kumar (2012) also calculated voting rights by following ( Claessens et al, 1999 , 2000 ; La Porta et al, 1999 ).…”

Section: Appendix Amentioning

confidence: 99%

“…The CSMAR database reflects the calculation of the cash-flow proportion of the family-controlled firms based on calculation methods ( Claessens et al, 1999 , 2000 ; La Porta et al, 1999 ). This study showed the examples below by Aslan and Kumar (2012) also calculated voting rights by following ( Claessens et al, 1999 , 2000 ; La Porta et al, 1999 ). Example 1: Pyramidal-holding Firm X Firm Y (40%) Firm Y Firm Z (15%) Firm X’s cash-flow (CF) and control (C) rights in Firm Z CF (shares owned): 6% (=40%*15%) C (votes controlled): 15% (=min(15%,40%)) Deviation of cash-flow from control rights : 15%/6% = 2.5 Example 2: Cross-holding Firm X Firm W (40%) Firm W Firm Z (15%) Firm X Firm Y (20%) Firm Y Firm Z (10%) Firm X’scash-flow (CF) and control (C) rights in Firm Z CF (shares owned): 8% ((=(20%,10%)+(40%,15%)) C (votes controlled): 25% (=min(20%,10%)+min(40%,15%)) Deviation of cash-flow from control rights : 25%/8% = 3.1 Example 3: Circular-holding Firm X Firm Y 35% Firm Y Firm 10% Firm Z Firm X 8% Firm X’s cash-flow (CF) and control (C) rights in Firm Z CF (shares owned): 3.5% ((=(35%*10%)) C (votes controlled): 25% ((=min(35%,10%)) Deviation of cash-flow from control rights: 25%/3.5% = 7.14 In turn, Z also has 8% of cash-flow and control rights in X.…”

Section: Appendix Amentioning

confidence: 99%

“…The researchers further found that R&D investment was more profound in family firms as compared to non-family firms. Eng et al (2021) found that R&D investments in family firms are more dependent on prior R&D as compared to non-family firms. The researchers further found that R&D investments in family firms are motivated by internal as well as external cash-flows more than non-family firms.…”

Section: Introductionmentioning

confidence: 97%

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Behavioural Psychology of Unique Family Firms Toward R&D Investment in the Digital Era: The Role of Ownership Discrepancy

Zulfiqar

Huo

et al. 2022

Front. Psychol.

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This study examines the R&D investment behaviour of different types of family-controlled firms with the moderating role of ownership discrepancy between cash-flow rights and excess voting rights by using the sufficiency conditions’ theoretical framework of ability and willingness developed by De Massis. It uses data from family firms that have issued A-shares from 2008 to 2018. They used pooled OLS regression for data analysis and Tobit regression for robustness checks. This study classifies family firm types into two categories, namely, the lone-controller family firms (LCFFs) and the multi-controller family firms (MCFFs), with each being further classified as “excess” or “no excess” voting rights. Both LCFFs without excess voting rights and MCFFs with excess voting rights have the “ability” and “willingness” toward R&D investment. LCFFs with excess voting rights and MCFFs without excess voting rights only have the ability but low willingness to invest in R&D. The study also establishes that Chinese family-controlled firms are heterogeneous toward risky investment. To the best of our knowledge, this study is the first to differentiate Chinese family firms by their unique ownership structure characteristics in investigating the effect of the family firm structure on R&D investment. The study is a novel attempt to test the willingness and ability framework of LCFFs and MCFFs. Previous studies based on agency theory have tacitly assumed that ability and willingness exist in family-controlled firms. However, this study challenges this implicit assumption.

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