Partner Differences, Institutional Environment Differences And The Governance Mechanism Choice Of Hotel Management Contract

International Hotel Group has entered into the deep end of China’s development strategy, experiencing the key period in its strategy- zero process indicates backwardness. On one hand, after 30 years’ accumulation, Chinese enterprises has acquired stronger power of price negotiating, in particular companies devoting to hospitality industry are dominating enterprises in all areas, and they enjoy relatively outstanding industrial advantages in their main business. The majority of these enterprises are equipped with powerful management experience and tradition, have clear orientation for strategic objects as well as continuing accumulation of hotel managing experience. On the other hand, the market integration area in China by International Hotel Group has been extended to second-tier and third-tier cities. Compared with the first-tier cities such as Beijing, Shanghai and Guangzhou, the systematic and environmental difference in different regions vary greatly. In other words, the expansion in China’s market by International Hotel Group will face the corporative difference from enterprises of different industries, contexts and objectives, as well as the regional systematic difference brought by Chinese economic transition. Under the situation of being not able to realize the ‘optimum(most matching)’ partners, it becomes a significant factor to consider in China’s market integration of how would the administration party chose their way to ‘deal with’ enterprise owner on the basis of the features of the cooperators and systematic environment. This research focuses on discussing and researching on the scientific problem of “during the transition period when China’s market is segmented, how both sides of non-equity alliance make the choice of governance mechanism on the basis of corporative feature and environmental characteristics”.Based on the inter-enterprise cooperative governance mechanism, strategic alliance concept, system theory, this paper selects literature research, questionnaire survey, and empirical study to analyze on the cooperators’ difference faced by the International Hotel Group and regional system difference, as well as on how those difference would influence the selection of contract governance system. In specific, this paper carries out a deeper analysis on three problems:(1) would the difference between administration party and the cooperator affect and how to affect the selection of hotel administration contract governance mechanism;(2) would the systematic and environmental difference in different region affect and how to affect the selection of hotel administration contract governance mechanism;(3) in face with the difference in different cooperators and regional systems, how would the administration party choose the right cooperation governance mechanism to produce better performance.The results shows that:(1) the larger the cultural and object difference are between the administration party and the enterprise owner, the more the hotel management contract will tend to select the contractual mechanism.(2) The higher the marketization degree the settling location is, the more possible the administration contract will be chosen. The lower the marketization degree the settling location is, the more possible the credibility mechanism will be selected.(3) The bigger the difference is felt by the administration party, the more possible the contractual mechanism will be selected, while regions where the marketization degree is higher has strengthened this choice.(4) Compared with the credibility mechanism, the contractual mechanism chosen by the administration party will create better hotel performance.(5) If the bigger the difference between both parties is, while the administration party has selected the contractual mechanism, it’s more possible for the hotel to have better performance; if the higher the marketization degree is where the hotel is settled, while the administration party has selected the contractual mechanism, it’s more possible for the hotel to have better performance.This paper has extended the research on management contract to the concepts like inter-enterprise cooperative governance mechanism, supplementing the analytical framework of management contract research; meanwhile, this research will combine enterprise features, environmental features, allied governance and other process management into the same analytical framework; in addition, the paper chooses to discuss the cross-region integration in China’s market by the International Hotel Group under a new environment. According to all empirical research results above, this paper has set one by one the proper governance mechanism selection methods according to the various cooperators’ features and environmental characteristics, and so that it provides empirical enlightening for the International Hotel Group and hotels in China to “make themselves larger and stronger” under the management contract mode.