The impact of CEO succession choices on digital transformation in family firms

Purpose This study investigates how CEO succession choices – specifically, the appointment of a family-successor CEO versus an external non-family CEO – affect digital transformation in family firms. Drawing on socio-emotional wealth theory and agency theory, it further examines how top management team (TMT) diversity and slack resources influence this relationship. Design/methodology/approach The analysis is based on a panel of family firms listed on the Shanghai and Shenzhen A-shares markets from 2014 to 2020. Using multiple regression models with controls for endogeneity and robustness checks, the study evaluates the impact of CEO succession choices on digital transformation. Findings Results show that family-successor CEO significantly promote digital transformation in family firms, with the effect being more pronounced in firms with stronger familial cultural characteristics. Strategic risk-taking is identified as a mediating mechanism in this process. Moreover, TMT heterogeneity and slack resources, not only enhance the link between family-successor CEOs and strategic risk-taking but also reinforce the indirect effect of strategic risk-taking in facilitating digital transformation. Originality/value This study contributes to the literature on digital transformation in the context of Chinese family firms and extends research on intergenerational succession and strategic change. It highlights the unique role of family governance in mitigating agency problems and shows how traditional family culture adapts to modern economic demands. The findings provide an Eastern perspective on corporate governance, enriching cross-cultural research in this field.