ABSTRACT
We posit that the dual identities of second-generation returnees present a complex situation regarding their influence on family firms’ entrepreneurial risk-taking (ERT). On one hand, their status as returnees may have a positive effect on firms’ ERT. On the other hand, their potential successor role may limit their ability to exert influence on ERT due to constraints imposed by the first generation, the firm and the home environment. To unravel the puzzling relationship between second-generation returnees and a family firm’s ERT, we examine conditions under which second-generation returnees promote or inhibit a firm’s ERT. In order to frame these conditions, we draw upon the upper echelon theory and the concept of managerial discretion. Our study of 270 family firms in China reveals that second-generation returnees holding higher managerial positions, operating in high-growing markets, or in institutionally underdeveloped regions are empowered to have a stronger positive impact on a family firm’s ERT. This research contributes to our knowledge of generational involvement, returnee executives, and the upper echelon theory.
Disclosure Statement
No potential conflict of interest was reported by the author(s).
Authors’ Contributions
Ying Fu: Conceptualization, Data curation, Writing – original draft & editing, Chien-Chiang Lee: Writing – original draft, Writing – review & editing, Weiqi Dai: Writing – original draft; Emma Su: Revision of the manuscript and proofreading.
Notes
1. To validate the direct effect results, we also perform several other analyses. First, we categorize the sample into high-tech and non-high-tech firms. Second, we divide the sample into big and small firms based on the median size of the firm. Third, to reexamine the findings, we also employ a micro-econometric method called propensity score matching (PSM). Across all these analyses, the results remain consistent, indicating that the direct effect of second-generation returnees on a firm’s entrepreneurial risk-taking is not statistically significant.