Excess Control Of Family Board Seats And Corporate Innovation

Innovation is the guarantee for enterprises to have core competitiveness,and how to promote enterprise innovation has always attracted much attention.Family business is an important part of China’s innovation system,but existing studies have shown that family businesses generally have problems such as low willingness to innovate and insufficient innovation motivation.Therefore,studying the influencing factors of family business innovation and exploring the influencing mechanism of family business innovation have become important theoretical and practical topics that need to be studied urgently.At present,there are studies on corporate governance to discuss its impact on family innovation,and the issue of board seat allocation is an important topic in the field of corporate governance.Over-delegation of family members to the board of directors is a special decision-making power allocation mode of family enterprises,and the superposition of the dual identities of controlling shareholders and directors of family enterprises is conducive to incorporating different governance levels into the comprehensive analysis framework,so as to better understand the innovative behavior of family enterprises.So how will this special model of allocation of decision-making power affect enterprise innovation? To be empirically tested.This paper takes China’s 2008-2020 Shanghai and Shenzhen A-share family listed companies as a sample to study the following three contents:(1)The impact of excessive control of family board seat on enterprise innovation.(2)The impact mechanism of family board seat over-control on corporate innovation.(3)The moderating effect of internal and external factors on the excess control of family board seats and corporate innovation,and further analyze whether the excess control of board seats affects the value of enterprises through corporate innovation.Through reading a large number of materials,the theoretical analysis of the impact mechanism,the original data was collected by using the family business sub-database of Guotai’an database,the original data was sorted,and finally the data analysis software was used to clearly reveal the impact of directors’ excess control on corporate innovation.It is found that:(1)The excess control of family board seat has a negative impact on corporate innovation.(2)The mechanism test shows that the over-control of family board seat increases the financing constraints of enterprises,thereby inhibiting corporate innovation.(3)Further research finds that when the degree of inter generational participation of family enterprises is higher,family members serve as chairmen,and belong to high-tech enterprises,the over-control of family directors inhibits innovation more severely,and the economic consequences show that over-control of family directors reduces corporate value by inhibiting corporate innovation.The possible research contributions of this paper are reflected in the following three aspects:(1)It enriches the research literature on the influencing factors of family business innovation.Previous literature mainly studies the impact of equity structure,founding control of family business,father-son co-governance,husband and wife co-governance,inter generational inheritance,family control,etc.on innovation,while most of the literature in the study of family control does not divide the shareholder level and director level in detail.This paper extends it to the special decision-making power allocation mode of excessive control of board seats in family enterprises,discusses the impact of corporate decision-making power allocation on enterprise innovation,and enriches the literature on the impact of corporate governance on corporate innovation of family enterprises.(2)It enriches the research literature on corporate governance and enterprise innovation mechanism of family enterprises.Previous studies have explored the influence mechanism of family governance on family business innovation based on agency theory and social-emotional wealth theory,and this paper discusses the impact of financing constraint mechanism based on resource-based theory.(3)This article has certain practical value.This paper finds that the excess control of family board seats increases the financing constraints of enterprises,thereby inhibiting corporate innovation,and further discusses the relationship between the two from the perspectives of inter generational participation,chairman identity and industry nature,so as to provide reference suggestions for family enterprises to improve their innovation ability from the governance level.