Family Involvement,Information Transparency And Corporate Innovation Activities

Innovation plays an important role for firms.Innovation investment is an important link when Chinese family firms want to achieve its transformation and upgrading.Chinese family firms are the important supporting force for Chinese economic development.But some research shows that R&D investment of family firms is lower than that of non-family firms.As we can see,although innovation has been highly valued by government and scholars,the actual innovation investment of family firms is still very weak.So what are the factors that cause family firms have such “fear of difficulties” performance? Enterprise is the main body of innovation investment,so enterprise governance is an important factor of innovation investment.Family involvement could make the firms form a unique non-economic social emotional wealth(SEW)target.SEW plays an important role in the decision-making of family firms,which make the firms' innovation activities in showing unique behaviors.This paper studies the influence of family involvement on the innovation activities of family firms,indicating that family involvement and information transparency can impact innovation activities.Family involvement represents the family's ability of intervening in innovation activities.Information transparency reflects the conflicts between family and outside investors.Moreover,the external environment constrains innovation activities.Chinese economic market is in the transition period.In the process of promoting marketization,the imbalanced development of various regions leads differences in firms' financing constraints.So in order to further study of family firm's innovation activities,following the framework of “funding sources of innovation-decision of innovation-decision results of innovation”,this paper studies the influence factors,motivation,attempts of firm's innovation form the perspective of family involvement and information disclosure.This paper attempts to answer the following questions:(1)Dose family involvement has direct impact on innovation activities of Chinese family firm?(2)Dose information transparency play the mediating role between family involvement and innovation activities of family firms?(3)Dose marketization play the moderating role among family involvement,information transparency and innovation activities?This paper firstly analyzes the relationship among the funding source of innovation,innovation decision and decision result firstly.The empirical result shows that there is a negative chain relationship among the funding source of innovation,innovation decision and decision result.Then,this paper analyzes the direct effect of family involvement on innovation activities,the mediating role of information transparency between family involvement and innovation activities and the moderating role of marketization among family involvement,information transparency and innovation activities in every stages of innovation activities.The main conclusions are following:(1)The source of funds for innovation activities.Family control has a significant and negative effect on external financing and information transparency has a complete mediating effect between family control and external financing.Family management also has a significant and negative impact on external financing and information transparency a partial mediating effect between family management and external financing.The marketization has positive moderating role between family involvement and information transparency,and marketization has positive moderating role between information transparency and external financing.Specifically,compared to firms in the region with low marketization,the negative family involvement-information transparency relationship,and information transparency-external financing relationship are weaken in the region with high marketization.(2)Decision-making for innovation activities.Family control has a significant and positive effect on innovation investment and information transparency has no mediating effect between family control and innovation investment.Family management also has a significant and negative impact on external financing,and information transparency plays a partially mediating role between family management and external financing.The marketization has positive moderating role between information transparency and external financing.Specifically,compared to firms in the region with low marketization,the negative relationship between information transparency and innovation investment is weaken in the region with high marketization.(3)Decision result of innovation activities.Family control has a significant and negative effect on innovation investment and information transparency has partially mediating role between family control and innovation investment.Family management also has a significant and negative impact on external financing,and information transparency has a partially moderating effect between family management and external financing.The marketization has positive moderating role between information transparency and firm performance.Specifically,marketization can mitigate the negative effect of information transparency on firm preformation.The theoretical contribution of this paper is as follows: first,this study enriches the innovation theory of family business.This paper integrates the capital source,innovation input and decision outcomes of innovation activities into a research framework,revealing the black-box mechanism.Secondly,it advances the study of agency theory of family business.From the perspective of information transparency,this study explores the mediating role between family involvement and corporate innovation activities.Moreover,this mediation role is also influenced by corporate external environment.It will help in understanding the relationship between family involvement and innovation activates that combined the effect of family internal dynamics and external environment.From practical perspective,this study establishes the reasonable mechanism for increasing fund source,ensuring innovation investment,and facilitating firm performance.