"Ripple effect" in family wealth succession in greater China : implicit norms, informal education, and external shocks

Abstract

Family firms account for two thirds of all businesses around the world, generate around 70%–90% of annual global GDP. However, we often hear that family businesses decline across three generations. To explore how family businesses can survive in the long term, especially at times of succession, researchers have analyzed family business succession without considering family succession. In this thesis, I focus on the succession of wealthy families in Greater China and redirect research to examine how family norms serve as the basis for family business succession and how these norms can facilitate the transmission of values across generations and management styles. This thesis includes three independent but complementary essays. In the first essay, drawing on an in-depth study of four cases of large business and nonbusiness family succession in Taiwan and a survey of successful family firms in Greater China, I use a mixed methods design to demonstrate that family business succession is rooted in the transmission of family norms. I also develop a dynamic four-layer model of norm transmission in family businesses. In the second essay, drawing on the socialization literature, research on corporate behavioral strategy, and threat–rigidity theory, I examine the relationships between family norms, value transmission across generations, and management style succession. I contend that families with implicit norms, compared with those without such norms, are more likely to ensure value consistency between parents and children, which facilitates the succession of management styles in terms of investment, strategy, and management. Moreover, the relationship between implicit norms and value transmission is enhanced by informal education (versus formal education) and family social interactions. In addition, I find that internal shocks weaken the relationship between implicit norms and value transmission, while external shocks enhance this relationship. In the third essay, based on the literature on value socialization within the family, I further examine how children influence their parents’ conservation and risk-taking, whereas the son/daughter’s socialization is positively related to parental risk-taking but negatively related to their own risk-taking. Overall, based on a multi-case study, a survey, and dyadic data collection and analysis, I contribute to the literature by developing a new theory of the ripple effect in family succession, opening a new dialogue for future research.