Freakonomics covered this in a podcast in 2011. They looked at how businesses all over the world in which the founder passed the helm on to a child tended to p

Freakonomics covered this in a podcast in 2011. They looked at how businesses all over the world in which the founder passed the helm on to a child tended to perform worse EXCEPT in the case of Japan. The reason is because Japanese firms often search for a strong performer to become the next CEO and then the current CEO formally adopts that person into the family. Audio podcast: http://freakonomics.com/2011/08/03/new-freakonomics-radio-podcast-the-church-of-scionology/ http://freakonomics.com/2011/08/03/new-freakonomics-radio-po... Transcript of the podcast: http://freakonomics.com/2011/06/03/the-church-of-scionology-full-transcript/ http://freakonomics.com/2011/06/03/the-church-of-scionology-... One of the papers cited by Freakonomics is here: http://www.insead.edu/facultyresearch/areas/finance/activities/documents/AdoptiveExpectations.pdf http://www.insead.edu/facultyresearch/areas/finance/activiti... That paper's title is Adoptive Expectations: Rising Sons in Japanese Family Firms, and the transcript is as follows: A unique Japanese practice of adopting adults, even if one has biological children, makes Japanese family firms unusually economically competitive. Using a large panel that very nearly comprises the population of postwar listed nonfinancial firms; we find inherited family firms more important in postwar Japan than generally realized, and also performing well – an unusual finding for a developed economy.  Adopted heirs’ firms outperform blood heirs’ firms, and match or nearly match founder­run listed firms. Both adopted and blood heirs’ firms outperform non­family firms (excluding founders’ firms). With blood heir gender and educational records as instruments, we find family succession events “causing” elevated performance.  These findings are consistent with adult adoptees displacing blood heirs in the left tail of the talent distribution, with the “adopted son” job motivating star managers, and with the threat of displacement inducing blood heirs to invest in human capital, mitigating the so­called “Carnegie conjecture” that inherited wealth deadens talent.