A new study from the Chinese University of Hong Kong (CUHK) Business School shows that diversity in family business leadership can boost long-term success. When family and non-family executives differ in age, education, and background, company performance often improves. However, this only happens when fairness and collaboration remain priorities.
Stronger Performance through Diversity
The research analyzed 262 family firms listed in Shanghai and Shenzhen. It found that demographic differences often create clearer hierarchies and inspire more innovative strategies. Professor Dora Lau Chi-sun, who led the study, explained:
“A well-defined power hierarchy allows the lower-status subgroup to defer to the higher-status subgroup, facilitating faster decision-making, clearer strategic direction, and more consistent execution. Together, these dynamics contribute to smoother and more efficient team operations.”
The study also highlighted two main advantages:
- Dominance complementarity – where authority and decision-making remain clear, with family executives usually holding more influence.
- Information and knowledge complementarity – where non-family managers bring new perspectives, creating richer discussions and innovative ideas.
The Risks of Imbalance
On the other hand, the benefits disappear when non-family executives face unfair treatment. Weak local professional support systems, such as auditors or consultants, also reduce collaboration. In those cases, tensions often overshadow the advantages of diversity.
Professor Lau stressed that family businesses should prioritize hiring managers with expertise and fresh viewpoints. Loyalty or similarity alone does not guarantee success.
Implications for Asian Family Firms
Family firms remain a major driver of Asia’s economy. Yet, this study shows that they must balance insider control with outsider expertise to sustain growth. With strong governance and professional support, diversity can transform leadership into a competitive advantage.
The full study is available on the CUHK Business School website: Power Play in Chinese Family Firms: Insiders vs Outsiders.
