Abstract: self-innovation is an important national strategy, and family governance is an ubiquitous and unique mechanism, but a little is known how the governance mechanism influences the strategy. R&D is the most powerful factor fostering innovative capacity, various types of R&D investments correspond to different uncertainty, appropriate return and cost, and various corporate governance mechanisms conduct different types of innovation. The paper examines how the family governance influences R&D investment, R&D investment portfolio,and investment momentum. The study, based on national sample, found family business invests less in product R&D than non-family business, but the intensity of process R&D is indifferent between the two types of business, as well as the ratio of process R&D in family business exceeds the ratio of product R&D in family business, furthermore, the larger family business facing lower utilization of capacity will increase the intensity of product R&D. the findings indicate family business will be risk avoidance only if risk is beyond some certain threshold, they keep a trade-off between risky gains and preserving SEW, and that they have a fairly high tolerance with bad performance.

Key words: process R&, D