Clan culture and industrial diversification of family businesses: evidence from China

Purpose Industrial diversification allows enterprises to expand their business scope by entering new industries. This paper tries to explore the relationship between clan culture and the industrial diversification of family businesses. Design/methodology/approach This study utilizes data on Chinese listed family businesses and employs a firm-level fixed-effects model to control for unobservable heterogeneity that does not vary over time and to reduce omitted variable bias. Under this framework, we examine the main impact and test the moderating effects of transgenerational succession and historical ownership. Findings Clan culture is negatively associated with the industrial diversification of family businesses. Furthermore, the inhibiting effect of clan culture on family businesses' industrial diversification is strengthened in the transgenerational succession period and weakened in restructured family businesses. Finally, this paper finds that the inhibiting effect is more significant in the growth and mature periods. Originality/value This paper provides a novel perspective on the study of family business diversification from the perspective of traditional Chinese clan culture. Moreover, by revealing the moderating effects of historical ownership and transgenerational succession on the aforementioned relationship, this study demonstrates the dynamic and conditional nature of this informal institutional influence, thereby deepening our understanding of how cultural factors shape corporate strategy within transition economies.