The Impact of Family-Based Human Capital on Corporate Innovation: Evidence from Sibling-Chairpersons in China.

This article investigates the impact of family-based human capital—specifically, a chairperson's having siblings—on corporate innovation in Chinese family firms. Using hand-collected data from 2008 to 2015, the study finds that family firms led by sibling-chairpersons exhibit significantly higher innovation output, measured by patents and patent citations, as well as greater innovation efficiency and quality, compared to firms with chairpersons without siblings. Leveraging China's one-child policy (OCP) as an exogenous shock in a regression discontinuity design, the authors provide robust evidence that sibling-induced human capital positively influences innovation through mechanisms such as sibling competition, knowledge spillover, and enhanced succession options. Further analyses reveal that sibling comanagement, sibling gender diversity, and sibling-related human capital also improve board gender diversity, investment efficiency, stock returns, and merger and acquisition performance. The sibling effect on innovation is also observed, though with caveats, in nonfamily firms, primarily state-owned enterprises. Overall, the findings highlight sibling-induced human capital as a novel and stable form of family-based human capital that contributes to firm innovation beyond traditional employee-embedded human capital.