Analysis On The Motivation And Effect Of Family Business Innovation Enhanced By Second Generation Intervention

Since the 1970 s,with the implementation of the reform and opening and market economy,some outstanding entrepreneurs have established family businesses,which contributes to the rapid growth of Chinese economy.Nowadays,many founders are at the age of retirement and the inheritance of family businesses will be at its peak.Meanwhile,Chinese external environment changes and family businesses must innovate under the new normal conditions.This paper chooses Vanward as the case study object,which is a family enterprise carrying out inheritance and innovation upgrading at the same time.Lu Yucong,the second generation successor,made a series of innovative measures with younger feature which were praised by many people.This paper mainly analyzes the motivation and effect of family business innovation enhanced by second generation intervention and not only uses special asset concept,social emotional wealth theory and authoritative legitimacy theory,but also includes generational differences theory to emphase the enhance of innovation by young new ideas.Besides,this paper illustrates the multi-dimensional innovation of Vanward.This paper finds that:(1)Lu Yucong made a series of innovations including technology,brand,marketing and business after his succession;(2)Lu family inheritance expresses the desire for extended social emotional wealth,which makes Lu Yucong pay more attention to innovation investment;(3)Lu Yucong had full formal authority but insufficient personal and ability authority.Through making innovations,he had successfully established functional authority;(4)Vanward had accumulated many special assets which are difficult to fully transmit,and Lu Yucong made up the loss of them by building new profit growth points;(5)Second generation intervention makes Vanward much younger and accelerates its transformation and upgrading from traditional manufacturing to intelligent and internet based manufacturing.Finally,this paper proposes that inheritance plans should be formulated and successors should be cultivated early for the enterprises that want to continue the traditional governance.Besides,generational differences should be properly treated and the second generation ought to take advantage of youth to innovate.