Governance Education and Innovation in Family Businesses:Insights from Leadership Transitions in China

Abstract

Intergenerational leadership transitions in family businesses significantly influence corporate innovation, with dual effects emerging during the succession process. Using data from family firms listed on China’s SME Board and GEM from 2010 to 2017, this study explores the relationship between management and ownership inheritance and innovation investment. Results reveal a negative impact on innovation during the joint management phase, while innovation improves under the full control of next-generation leaders, highlighting the potential of governance education in shaping sustainable innovation. Governance education provided by the senior generation enhances corporate social responsibility, reduces risk tolerance, and encourages conservative innovation strategies. The study further identifies gender disparities, with male successors often showing stronger negative effects on innovation. Moreover, political connections and market-oriented regions intensify challenges in sustaining innovation during leadership transitions. This research contributes to understanding the mechanisms linking governance education, leadership transitions, and innovation, offering insights for fostering resilience and
innovation in family businesses amid generational shifts.