A new battlefield for later-generation successors: The effects of transgenerational succession on corporate venture capital investments

Drawing on self-determination theory, we propose that newly appointed later-generation successors in family firms are motivated by (a) intrinsic desires to secure and legitimize their leadership roles and (b) identified or integrated forms of extrinsic motivation to uphold the continuity of the family dynasty. In evaluating various strategic options, these successors are particularly inclined to adopt corporate venture capital (CVC) as a preferred vehicle. CVC investments facilitate leadership consolidation by easing the transition from outgoing family leaders and gaining acceptance among subordinate executives, but also serve the long-term goal of sustaining the family firm across generations. Using a sample of Chinese family firms and a difference-in-differences empirical design, we find that transgenerational succession is associated with a significant increase in CVC activity. Further analyses show that this effect is especially pronounced when successors exhibit strong motivation to assert leadership and preserve dynastic continuity.