Intergenerational succession has become a widespread and pressing issue for MSEs and family businesses alike. Photo: TUCHONG

The private sector constitutes an essential component of China’s market economy, with micro and small enterprises (MSEs) playing a particularly significant role due to their sheer numbers. From 2017 to 2022, China’s first-generation private enterprises broadly entered a phase of intergenerational succession. However, many MSEs either lack the willingness or the resources to employ professional managers, while intra-family succession often faces challenges—such as weak succession intent among the younger generation—impeding the sustained accumulation of business capacity. Consequently, intergenerational succession has become a widespread and pressing issue for MSEs and family businesses alike.

In the field of management studies, scholarly attention to family relations and second-generation succession has primarily focused on two aspects. First, there is broad consensus that succession is a patterned process and that smooth transitions at each stage are essential to overall outcomes. Second, scholars widely recognize the successor’s willingness to assume leadership as a critical factor. However, these discussions on “willingness” have typically excluded family and kinship dynamics, which may play a pivotal role in the Chinese context. This paper aims to incorporate that missing perspective.

Sociological theories on the mechanisms of social status reproduction offer a powerful complementary framework. Intergenerational succession can be viewed as a form of reproduction of the parental generation’s social position, with cultural capital acting as the transmission mechanism. Yet this framework also reveals a new paradox: Although first-generation entrepreneurs have accumulated considerable experience and wealth, their children display marked variation in their willingness to inherit the family business. Social capital theory cannot fully account for this phenomenon.

Social capital theory implicitly treats the parent and child generations as independent individuals, making habitus, upbringing styles, and social capital the primary mediating mechanisms for understanding intergenerational relations and influence. However, in the Chinese familial context, the theoretical centrality of habitus itself is subject to debate. Given the differing social and historical conditions between generations, intergenerational relationships also play a formative role in shaping and perceiving habitus.

To better understand the second generation’s decision-making regarding business succession, it is necessary to examine how they weigh considerations related both to the family organization and the enterprise itself. The younger generation’s career decisions not only reflect their understanding of business management or enterprise value, but also express their interpretations of parent–child relationships within the family.

Four inheritance patterns

This study draws on fieldwork conducted in Yongkang, Yiwu, and Wenzhou in Zhejiang Province, covering industries such as wholesale and retail, traditional manufacturing, services, and e-commerce. Using a snowball sampling method, the study interviewed 24 second-generation members of MSE families, all of whom belong to Generation Z (born between 1995 and 2009)—a cohort often characterized by distinct behaviors, psychological traits, and values. Based on the field data, this paper identifies the key factors shaping these individuals’ career choices. The decision to inherit the family business reflects a balancing act between family and business. On the “family” side, the younger generation’s perception of intergenerational relationships influences their sense of obligation to take over. On the “business” side, their understanding of the parental generation’s life-long entrepreneurial efforts—specifically whether they perceive the enterprise as inherently valuable—also plays a critical role.

The first category consists of inheritance cases in which successors identify with both intergenerational relationships and the business itself. For instance, Xiaohu’s family is involved in manufacturing and selling thermos bottles. His parents had always planned for him to take over the enterprise, a plan he implicitly accepted from a young age. Though Xiaohu and his parents had certain disagreements after college due to his passion for music, these tensions never altered his final decision to join the family business. Both sides shared the view that music would remain a hobby, not a career.

By contrast, Xiaofei also chose to succeed the family business, but his motivations were rooted in entrepreneurial passion. After studying abroad, he critically reflected on the family’s traditional business style, describing it as “ineffective socializing” and expressing a dislike of its intense interpersonal demands. Xiaofei’s approach to entrepreneurship reflects a strong sense of selfhood, and his business practices already exhibit signs of “cultural feedback.”

In both cases, successful succession was facilitated by mutual respect and understanding in the parent–child relationship, which fostered a shared sense of commitment to the family enterprise.

The second category comprises cases of resistance, in which successors reject both intergenerational ties and the business itself. In these cases, the second generation’s alienation partly stems from the family business itself. Recalling their upbringing, they describe parents who were fully absorbed in the enterprise, with conversations always revolving around the store, factory, or workers. Feeling neglected during childhood, they grew up emotionally distant from their parents.

When this emotional detachment is paired with parental coercion to take over the business, the result is often severe intergenerational conflict. The rupture between the surface-level traditional values of the parents and the modern, individualized self-conception of the children leads to all-encompassing clashes.

The third category includes ambivalent cases, in which successors reject intergenerational relations but identify with the business.

Take, for instance, Xiaoyi, whose parents run a successful education and tutoring institution. Deeply engaged in both instructional and administrative roles, Xiaoyi’s parents oversee a team of subject-specific educators and serve a large student body, resulting in a dynamic and prosperous operation. Xiaoyi’s parents fully expect her to return and assist with the business. While they have not explicitly asked her to take full control, they do anticipate her participation, at least as a teacher.

However, Xiaoyi remains conflicted. She desires independence but lacks the confidence and means to venture out. At the time of the interview, she was working in a local new media company with low pay, limited career prospects, and minimal growth opportunities. On one hand, Xiaoyi has not yet found a job that she truly identifies with; her career prospects remain uncertain, and her income is insufficient to support a comfortable life independently, leaving her reliant on her family’s support. On the other hand, she feels social pressure to chart her own path, and the tension between hesitation and unwillingness makes it difficult for her to find a sense of purpose in joining the family business.

The fourth category includes cases of career shift, in which successors align with family but reject the family business. Some MSEs’ second-generation members reject the family business due to multiple factors. First, having witnessed the hardships of entrepreneurship, they do not idealize business ownership. Second, when other socially recognized and seemingly more valuable career options are available, a second-generation heir’s decision to leave the family business and pursue a different path often gains support from both generations. Professions like teaching, which are held in high social regard, or securing a public-sector job, which can enhance social status, are common alternatives. In cases where the family business has not achieved significant scale or distinction, its occupational and social status is perceived as relatively low. Even if it generates more income than salaried positions in major firms, some successors still do not see taking over the family business as an appealing career option.

A “post-60s” couple operating a sporting goods factory in Yiwu illustrates how the younger generation’s reluctance to take over can shape their parents’ business strategies. Despite having built a sizable enterprise with over 100 employees, their only son became a software engineer in a major e-commerce company and chose to settle in a first-tier city rather than Yiwu. Upon learning of their son’s disinterest in the business, the couple became more conservative, ceasing efforts to expand their local business networks.

Succession shaped by familial and societal forces

The career choices of the younger generation may appear individualistic on the surface, but they are deeply shaped by perceptions of intergenerational relationships and the subjective value of entrepreneurship. Succession in MSEs is not merely a personal decision—it emerges from the intersection of familial and societal forces. Wealth accumulation alone is not sufficient to ensure business continuity; the commercial values acquired through family and socialization is equally critical.

A singular focus on profit is easily replaced by competing values. Across most cases in this study, the younger generation’s upbringing and intergenerational relations significantly influenced their perceptions of business management. Where second-generation successors took proactive roles in reflecting on, sustaining, and innovating the family business, their parent–child relationships shared common traits. For example, emotional relationships that appear loose and independent yet remain intimate and supportive—rather than enforcing values through obligation—may ultimately encourage the younger generation to take over the family business, whether from a sense of traditional responsibility or modern self-awareness.

This study suggests that for Generation Z, parent–child relationships remain a profound—albeit sometimes latent—context for major life choices. Their decisions about business succession reflect a dual tension: on one hand, an increasing emphasis on individualism and self-centered choice-making; on the other, the growing (not diminishing) influence of familial relationships and expectations—sometimes expressed in acts of outright resistance. While some global studies have found that Gen Z tends to assert agency in work and prioritize family in social life, the dynamics discussed here suggest a more complex Chinese pattern, where the symbolic structure of “home” continues to shape both life and career trajectories.

In a sense, it may be through breaking the forced conformity between parent and child that successors become more capable of understanding, continuing, or even renewing their parents’ aspirations—returning to a unified parent–child identity.

Ji Yingying (professor) and Dong Xiaoyu are from the School of Sociology and Political Science at Shanghai University.