Counting on Family? Leadership team composition of firms with rural origin founders in China

Although initiatives to promote equality, diversity, and inclusion are gaining widespread acceptance among corporate elites, less attention has been paid to firm leaders from disadvantaged backgrounds.

This study explores how socially discriminated firm leaders use family to overcome their market disadvantages. In the context of China, we examine founding leaders with rural family origins—rural founders, who face discrimination in the Chinese urban–rural chasm. Drawing on the family embeddedness perspective, we argue that rural founders are more likely to use family members on leadership teams, while this effect is mitigated by achieved prestige at founder and firm levels.

Furthermore, we argue that the use of family members is more likely to contribute to firm performance for rural founders. Using data on Chinese privately founded listed firms, we find support for our arguments. Our study offers novel insights and evidence about how family embeddedness can help socially discriminated firm leaders address market disadvantages and gain competitive performance.

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