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The succession process in Chinese family firms: A guanxi perspective

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An Erratum to this article was published on 12 September 2012

Abstract

Intergenerational succession is a principal cause of the high failure rate among first- and second-generation family businesses. The purpose of this paper is to contribute to the understanding of the complexity and dynamics of the succession process by examining the role of guanxi. This paper uses an exploratory case study of six Chinese family firms. The results of this research indicate that (1) the succession process of entrepreneurs’ guanxi networks can be divided into four representative phases, namely, preheating, triggering, readjusting, and reconstructing; and (2) each phase requires performing some characteristic tasks. Such tasks include the cross-generational teaching and learning of guanxi philosophy, the deconstruction of the profile of guanxi networks, the introduction of the next generation to existing guanxi parties, the cross-generational role readjustment in guanxi building and management, the renewal of guanxi parties, and the rebuilding of guanxi net structures. The results of this study also provide an extended theoretical model that helps to explain the relationship between the intergenerational transfer of entrepreneurs’ guanxi networks and the transfer of leadership.

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Notes

  1. The founding of new organizations often started from the development of different kinds of exchange relationships, whether social/affective or economic/instrumental oriented, by their founders (e.g., Larson & Starr 1993).

  2. This is often a primary or even the ultimate target of entrepreneurs and their families (e.g., Cadieux, Lorrain, & Hugron, 2002; Steier, 2001). Of course, this is also a necessary condition in which a firm can be clarified into family firms (e.g., Chrisman, Chua, & Litz, 2003; Habbershon, Williams, & MacMillan, 2003).

  3. Indeed, we had originally hoped to observe first-hand activities, but we were unable to obtain permission to act as participant-observers.

  4. With regard to founders, the title was adjusted appropriately. For brevity, the detail will not be reported.

  5. During our interviews, several entrepreneurs, both first- and second-generation, pointed out that China’s economy is not a pure market economy but a political economy.

  6. In Hwang’s (1987) study, the guanxi was classified into three categories: socio-affective, instrumental, and mixed. Socio-affective guanxi refers to family and family-like relationships where social interactions primarily satisfy the need for belonging and emotional attachment. Instrumental guanxi mainly refers to the relationship between strangers, where there is no expectation of affection but rather an expectation of objective and fair exchanges similar to those occurring between buyers and sellers. Mixed guanxi involves exchanges of both feelings and material benefits that often occur among friends, colleagues, and people from the same region.

  7. As initiators of the original achieved or voluntary relationships, they usually play an active role in determining the character and tone of each exchange (Yang, 1994).

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Authors and Affiliations

  1. School of Management, Zhejiang University, PO Box 1512, Hangzhou, 310027, China

    Junsheng Dou

  2. College of Business and Management, Shaoxing University, Shaoxing, 312000, China

    Shengxiao Li

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  1. Junsheng Dou
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  2. Shengxiao Li
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Correspondence to Junsheng Dou.

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This work was supported by the National Natural Science Foundation of China (grant no. 70472049), the Ministry of Education of China Humanities and Social Sciences Research Project (grant no. 09YJC630196), the Fundamental Research Funds for the Central Universities, and the Postdoctoral Science Foundation (grant no. 201003716).

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Dou, J., Li, S. The succession process in Chinese family firms: A guanxi perspective. Asia Pac J Manag 30, 893–917 (2013). https://doi.org/10.1007/s10490-012-9287-7

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