Cooperative Dilemma And It's Breaking Through Between Family Business And Professional Manager In Our Country--In Perspective Of Trust

[Abstract] This paper regards family business in our country, which rose since theend of the seventies and the beginning of the eighties in the 20th century, as theresearch object, and studies the cooperative dilemma and it's breaking throughbetween the family business and professional manager in perspective of trust.Chapter one is the introduction which including the meaning of this topic, basic trainof thought, theoretical foundation, research method, innovation, main views and thearrangement of structure. Chapter two is the document survey and explanation of therelevant problem. The family business is defined as enterprise whose ownershiprights is owned by one or several families and the strategic decision direction is alsocontrolled by them. The definition of trust and the analysis of Chinese trustcharacteristics are proposed in this chapter. Chapter three analyses the history of the changes of family business institution inU.S. and China, and divides the development of family business into classical,accurate classical and modern three stages. Then this chapter summarizes the mailcharacteristics of different stage from ownership rights, control rights andgovernment structure, and points out the as the changes of family business, the trusttype of occupying the leading position changes too, which includesidentification-based trust, knowledge-based trust and law-based social trust. Thischapter also points out that the rise course of manager-oriented business, at the sametime, is the course from traditional family business to modern family business(namely the modernization of family business) and modern family business is one ofthe most important components in the modern institution system set. Chapter four analyses the current situation of family business in China fromownership rights, control rights and government structure by quoting a large amountof data and points out that family business in China is locked in classical or accurateclassical stage now, facing the modernization subject. By analyzing the twoexamples of Jin-trader and Chinese family business in Hong Kong, this chapterconcludes that the cooperation between family business and professional managerisn't realized which doesn't belong to particularistic trust. Just because theparticularistic trust based on blood relationship and geographical reason wasdestroyed exactly and the new law-based trust has not set up, the cooperativedilemma has been caused by this double trust lack. Chapter five gives a deeper theoretical analysis to the cooperative dilemmas offamily business in our country. Firstly, by introducing exclusion, the theory ofhuman capital is expanded and the human capital of the manager is analyzed fromspecificity and exclusion and points out that the specificity of human capital willmake it's owner under other's control, but the exclusion will make it's owner controlothers. On this basis, this chapter concludes that there is a bilateral, not unilateral,moral hazard between family business and professional manager. Because of thelegal system and market mechanism being imperfect and the relation network beingvery important, the bilateral moral hazard between family business and professionalmanager (especially the manager on the senior level) is particularly serious. Whichmaking ex post establish trusty relationship very risky, the embeddedness of ex antetrust is very important to mitigate the moral hazard. However, because of it's ownfragility, the instrumental and particularistic trust can't support the cooperationbetween family business and professional manager. Chapter six analyses the relation between the degree of mutual trust betweenfamily business and professional manager and the expansion of the principle-agentchain in family business through a trust model. The trusty state is divided into threekinds including symmetrical trust (mutual trust), asymmetry trust and distrust. Theconclusions of this model are: (1) com...