The evolution of family business in China: an institutional perspective

Legitimacy Challenges in Terms of Succession Planning and Internationalization in Family Businesses

“…However, in practice, while FBs contribute to around 60% of China's GDP, there is evidence that around 80% of second-generation members are unwilling to take over the FBs, attributed to differences in generational values and a preference for engaging in start-ups instead [19]. In addressing this, the Chinese Government had enacted a set of policies, namely the Small and Medium Enterprise (SME) Promotion Law in 2003, which facilitates access of SMEs (mostly family-controlled) to financial resources including loan guarantees [20]. The Chinese Government also offers support in the form of business specialisation, consultation and training to managers, which would enhance their professional view (and, thus, legitimacy) in the public eye.…”

Does intergenerational leadership hinder the realization of innovation potential? A resource orchestration perspective

“…27.9 percent of the sampled firms were less than 10 years old and 61.4 percent between 10 and 19 years old at the time of data collection. China initiated its economic reform in 1979, when the governmental institutions recognized the potential contribution of the private economy and deliberately altered their policies (Wang et al, 2014). Later on, in the 1990s the globalization pressure further induced China to align its economy with the international market, with respect to entrepreneurship and private ownership (Kshetri, 2007).…”

“…Later on, in the 1990s the globalization pressure further induced China to align its economy with the international market, with respect to entrepreneurship and private ownership (Kshetri, 2007). In 1992, Deng Xiaoping made his renowned eulogy that "being rich is glorious", showing a fundamental strategic alteration at the national level (Wang et al, 2014). The majority of businesses in the sample are governed either entirely by the first generation (71.4 percent) or jointly by the first and second generations (23.0 percent).…”

“…From the foundation of new China in 1949 to 1978, entrepreneurship and private economy had been a political taboo (Kshetri, 2007). The family business economy was prohibited by the governing regime, despite China being a prominent economic force for centuries and the private economy having been prosperous under many dynasties' imperial governance (Wang et al, 2014). Finally, in terms of size, most of the respondents fall into the size band of 50-249 (54.4 percent), which is larger than what would be expected in a comparable sample in the West.…”

Internal managerial succession in family companies

“…In Europe, German-speaking countries (Gabriel & Bitsch, 2018), as well as Spain (Casillas, Mereno-Cerdan & Lopez, 2015) and Italy (Ruggieri, Pozzi & Ripamonti, 2014) dominate in this aspect, which confirms the thesis that the effective involvement of the next generation of the family is a sign of the generational survival of the family business (Benavides-Velasco, Quintana-Garcia & Guzman-Parra, 2013;Santora & Sarros, 2008). An important source of inspiration in planning succession are the examples embedded in the reality of the functioning of family businesses in countries such as Germany (Klein, 2004), China (Wang, Pei & Liu, 2014), India (Budhiraja & Pathak, 2018) or the Middle East (Deloitte, 2017). Worldwide statistics show that about 70% of companies starting as family ones do not pass into the hands of the next generation, and about 90% fail in the third generation (Fleming, 2000;Safin & Pluta, 2014).…”