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Inherited challenges: How second-generation involvement hinders green innovation in family firms

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  • Liu, Baohua
  • Wang, Qilin
  • Chang, Samuel
  • Zeng, Yongliang

Abstract

Drawing on a sample of Chinese family firms covering 10182 firm-years from 2007 to 2019, we examine the impact of second-generation involvement (succession) on green innovation in family firms. Our findings suggest that second-generation succession adversely affects green innovation. Mechanism analyses demonstrate that second-generation involvement reduces green innovation by restricting access to bank loans, reducing government subsidies, and lowering corporate risk-taking. Cross-sectional analyses show that the detrimental effect of succession on green innovation is amplified when a successor attains a lower level of education or possesses a weaker background in research and development. Furthermore, the adverse impact is more pronounced in firms with lower institutional ownership or state shareholding. Overall, we provide substantial evidence that second-generation succession in family firms is one specific factor, among many, that adversely impacts firms’ green innovation. Finally, we discuss policy implications for these findings.

Suggested Citation

  • Liu, Baohua & Wang, Qilin & Chang, Samuel & Zeng, Yongliang, 2025. "Inherited challenges: How second-generation involvement hinders green innovation in family firms," International Review of Economics & Finance, Elsevier, vol. 103(C).
    • Handle: RePEc:eee:reveco:v:103:y:2025:i:c:s1059056025006380
    DOI: 10.1016/j.iref.2025.104475
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