Would Family Firms Approaching Succession Prioritize Innovation Investment or Empire Building? A Temporal SEW Perspective

This study develops a temporal socioemotional wealth (SEW) perspective to examine how family firms’ strategic decisions shift as intergenerational succession approaches. Integrating SEW perspective with temporal construal theory, we argue that perceived proximity to succession triggers a shift from aspiration-based to temporal-needs-based SEW, reducing the salience of long-term benefits such as innovation while increasing the appeal of short-term concrete actions such as asset investment. Using data on pre-succession Chinese family firms, we find that firms approaching succession reduce R&D investment while increasing asset investment over time. Successor preparation weakens, while sibling competition strengthens, these effects. Our findings highlight the importance of temporal distance to succession in shaping SEW priorities and offer new insights into heterogeneity among family firms.