Chapter 1.2: Inter-Generational Difference and Entrepreneurial Portfolio Approaches

The paper aims to investigate the impact of generational difference on the adoption of portfolio entrepreneurship in family firms. Different from non-family firms, the extant literature recognizes the role of next-generation family members in motivating families in the adoption of portfolio entrepreneurship. The paper discusses the impact of the heterogeneity of the next-generation human capital against the characteristics of the incumbent generation in the adoption of an entrepreneurial portfolio approach. Next, from a collection of data on family members and narrative evidence of portfolio approaches in annual reports of listed family firms in China, we quantitatively examine hypotheses of the relationship between inter-generational difference and the adoption of an entrepreneurial portfolio approach. Through a multinomial logit regression, the results show the significant role of foreign learning in driving the adoption of portfolio entrepreneurship. Also, educational gap between two generations play some roles in predicting different types of portfolio entrepreneurship. This research contributes both to the portfolio entrepreneurship study, and to the study of family firms. On the one hand, this paper enriches the study of antecedents to entrepreneurial portfolio approaches. Different from typical financial reasons in choosing portfolio approaches, the heterogeneity of decision makers can also become the antecedents to the portfolio approach. On the other hand, the portfolio entrepreneurship allows next-generation family members doing things differently but inside the family firms, so that it be considered as one alternative to the succession plan.