Now Chinese family firms are faced with the stage of succession, and the second generations are regarded as “Fu Er Dai”. Based on the reality and social identity theory, this paper investigates 308 family firms listed on Shanghai Stock Exchange and Shenzhen Stock Exchange in China from 2004 to 2013, to study decision formation mechanism of start-ups growth by the second generations through diversification strategy and influencing factors. The empirical results illustrate that:in the non-manufacturing family firms, the autonomy of the second generations has significantly positive impact on diversification strategy; the education background of the second generations weakens the positive relationship between the autonomy of the second generations and diversification strategy to some extent. However, in the manufacturing family firms, the autonomy of the second generations has a negative impact on diversification strategy, and the overseas background of the second generations plays a negative moderating role in this relationship. It implies that in order to obtain social identity, the intrafirm strategic reform carried out by the second generations of family firms is affected by industry factors and their capability endowments. The conclusions not only enrich theoretical category of diversification strategy in the background of family succession, but also have the reference for strategic practice of family succession.