The Relationship between Psychological Factors and Succession Intention of Heirs in Chinese Family Firms

Abstract

Family firms have been omnipresent and have dominated economies around the world. In the worldwide,
about 30 per cent of family firms survive into the second generation and only 10 per cent can finish the
baton-passing process to the third generation. However, these rates are expected even lower in Chinese
family firms. With regard to family firms, the importance and challenges of family firm succession
became more evident. In the process of the succession, main stakeholders consist of the incumbent
owners, the potential successors, the family and the family firm. This study focused on the stakeholder of
potential successors and endeavoured to discover relevant factors that influence their willingness to
succeed family firms. According to the literature review, a number of factors, which can be classified into
individual factors, family factors and organisational factors may exert different influence on next
generations‟ succession decision. Therefore, this study selected nine Chinese second generations to test
particular influence of these factors. Interview was the primary data collecting method adopted. The
results of the research revealed that some relevant factors coincide with findings from the literature review
such as individual intention, responsibility, gender and certain organizational factors, while some other
factors were new finding including the factor civil servant. However, the factors of personal abilities and
primogeniture were found irrelevant in this study. This finding reminds the importance of family influence
to the parents with family firm. In addition to the importance of responsibility, the first generation should
respect their children‟s individual intention derived from personal needs and interest should be regarded as
the core factor that lead to second generation‟s desire to join the family firm and a higher potential to
sustain and improve the family firm‟s performance.