Does the well-matched marriage of successor affect the intergenerational inheritance of family business?

Family businesses are crucial to China's economy, yet intergenerational succession presents significant challenges. The traditional model often involves the son inheriting the father's business. While prior research emphasizes the successor's personal capabilities, this study explores the often-overlooked role of the successor's marriage, particularly the concept of a 'well-matched marriage'. In China, the emphasis on family and the traditional values associated with well-matched marriages—considering socioeconomic status, family background, and cultural compatibility—make this a particularly relevant area of inquiry. The research aims to understand how well-matched marriages (defined by the alignment of social levels, economic conditions, cultural values, and personal compatibility) affect the intergenerational transmission of family businesses, building upon Becker's theory of 'Specific Marriage Capital' and acknowledging the role of social capital in family firm success. The study seeks to bridge the existing research gap by examining the link between marital relationships and intergenerational succession, offering valuable insights into the specific context of Chinese family enterprises. The expected contribution lies in expanding the understanding of family business inheritance beyond individual competencies to include the significant influence of marital relationships and the introduction of a refined 'specific marriage capital' perspective.

The literature review covers two main areas: family business succession and well-matched marriages. Family business succession is a multi-stage process involving the transfer of responsibilities, control, and socio-emotional wealth. Various factors influence success, including individual characteristics of both founders and successors, interpersonal dynamics, organizational structures, and societal factors. Existing research highlights the importance of second-generation competencies, such as networking and strategic decision-making. The well-matched marriage literature, while primarily focused on sociology and marriage, emphasizes the importance of socioeconomic similarity, family status, and shared values. Traditional concepts focus on external factors like social status and economic compatibility, while modern interpretations emphasize internal compatibility such as shared values and lifestyles. The theory of specific marriage capital highlights the potential for couples to maximize resource utilization and social capital, impacting family business growth and stability.

This study employs an exploratory qualitative methodology utilizing a comparative case study approach. Two contrasting cases—Shanxi Haixin Steel Group Co., Ltd. (Haixin Steel) and Smart Hero Group Co., Ltd. (Smart Hero)—were selected for analysis. The selection criteria focused on cases where succession occurred without a formal plan, allowing for a comparison of contrasting outcomes. The cases also represent contrasting examples of well-matched and non-well-matched marriages within the second generation. Data collection involved a comprehensive search across various Chinese databases (CNKI, Wanfang, VIP, Baidu Academic, Baidu News, Sohu, and Guandian), utilizing keywords related to the companies and succession/inheritance. The triangulation principle was employed to ensure data credibility. A total of 175 pieces of information related to Haixin Steel and 127 pieces related to Smart Hero were identified. The analysis focuses on comparing the experiences of the two cases to explore the relationship between the successor's marriage and the success or failure of intergenerational inheritance. The two hypotheses tested were: H₁a: Non-well-matched second-generation marriages are not conducive to the intergenerational inheritance of family businesses. H₁b: Well-matched second-generation marriages are conducive to the intergenerational inheritance of family businesses.

The case study of Haixin Steel illustrates the negative consequences of a non-well-matched marriage. Zhaohui Li's marriage to actress Xiao Che, characterized by significant differences in background, values, and lifestyle, contributed to marital instability and ultimately, the company's downfall. The lavish wedding, short-lived marriage, and subsequent divorce damaged Zhaohui Li's public image and hindered his ability to maintain critical relationships with government officials and business partners. The lack of complementary social networks and shared values exacerbated the challenges of succession, leading to financial difficulties and bankruptcy. In contrast, the Smart Hero case, featuring Dingjian Zhu's well-matched marriage to Audrey, exemplifies the positive impact of a harmonious marital relationship on family business success. The shared business backgrounds, family values, and complementary strengths fostered a stable family environment and enhanced social capital. Dingjian Zhu's wife provided emotional support and facilitated business decisions, while also contributing to the company through charitable work and leveraging their combined networks. Mission Hills' growth and diversification are partly attributed to this collaborative and supportive family environment. The contrasting outcomes of these case studies support the hypotheses, demonstrating the significant role of well-matched marriages in fostering successful intergenerational inheritance of family businesses.

The findings support the central argument that the successor's marriage significantly impacts family business succession. A well-matched marriage provides crucial social, emotional, and economic support, contributing to the stability and success of the business. Well-matched couples benefit from a harmonious family environment, strengthened cohesion, improved public image, and expanded social networks. These factors contribute to efficient decision-making, resource integration, and reduced agency costs. Conversely, non-well-matched marriages can lead to instability, conflict, damaged reputation, and ultimately, business failure. The study highlights the importance of considering marital dynamics as a critical factor influencing the success of intergenerational succession in family businesses. The findings are particularly relevant in the Chinese context, given the emphasis on family values and the traditional concept of well-matched marriages. The research suggests that future succession planning should incorporate the assessment of potential marital compatibility as a key criterion, especially in cultures where family plays a prominent role in business.

This study demonstrates that the successor's marriage significantly impacts family business intergenerational inheritance in China. Well-matched marriages enhance social capital, improve business performance, and facilitate successful transition, while mismatched marriages can lead to negative consequences. The findings contribute to existing theories on marriage capital and succession planning. Future research should involve larger-scale empirical studies to quantify the impact of marital compatibility and examine the generalizability of these findings across diverse cultural settings.

The study's limitations include its reliance on a qualitative, case study approach, which restricts generalizability. The sample size is small, limiting the statistical power of the findings. Future research should incorporate quantitative methods and a broader range of cases to enhance generalizability and address potential biases associated with case selection. The focus on the Chinese context might limit the applicability of the findings to other cultural contexts with different marital norms and family business structures.