On The Internal Governance Of Our Family Business

With the development of the market economy of our country, thefunction of familial firms is more and more remarkable day by day insociety and economy. On the whole, the scale of familial firms goes fromsmallness to greatness. The function changes from weakness to strength.The development trends from slowness to quickness. Nowadays, theinside governance of firms gradually becomes one of decisive factors ofsurvival and development of a firm, with the establishment of the order ofmarket economy. For this reason, the dissertation takes the insidegovernance of familial firms of China as the research and analysis target. Major economics generally thinks that classical familial firms are aformer modern organization which is more laggard than corporation firms.Managing a firm with familial rules is also a backward managerialmethod. According to the view of major economics, familial firmscontrolled by families are a kind form of classical firms which declinesday by day. At the demand of inherent growth of an enterprise, familialfirms will transform along the route of separating ownership frommanagement, and carry out the transition in order to become modernjoint-stock company system controlled by professional managers (Berli,Means, 1932, Chandler, 1987). Chandler (1997) thinks that the family-runcompany is just very popular in initial stage when economy isindustrialized in a country, with industrialization and the development ofeconomy, with the evolution of firms' organization, the family-runcompany will wither away gradually. Familial firms are regarded as a kind of backward enterprise system,and the relative theoretical research is very limited too. In China, theignorance of economics scholars' studies on family's system is amazing(Li Xinchun, 1998). The research on familial firms is nearly neglected bypeople, and it is regarded as an insignificant modern subject (ChuXiaoping, 2000). Li Xinchun (1998) points out that, lacking theunderstanding of familial system and familial firms, it is hard toaccurately grasp the development of China's economy, especially theenterprise organization. The familial firms of China are not a thing from abroad. It onceexisted in a large amount in starting point of modern history of China,and has gone through the long-term development and vicissitude. Thesmall shops run by couple, township enterprises of 1980s and smallowners of the 1990s have shade of the embryonic form of familial firms.What formed enormous contrast with the theory is, the familial firms ofour country are no matter on the quantity or on the economic strength, thedevelopment speed is faster and faster. Once there is enough policy soilfor familial firms, it will become the major mode that the Chinese privateenterprise starts an undertaking rapidly, and the appearance of the familialfirms makes people resurvey the modern meaning of China's traditionalsocial economic system. There are not only a large number of familial firms with classicalmodes, but also the familial firms with corporation form which controldirectly or indirectly listing companies in the status of natural persons atpresent in our country. With the constant enlargement of the scale of firms,familial governance mode has restricted the development of firms. Thedrawback appears gradually. The familial firms confront urgent demandof going out of familial system. Numerous experience researches indicate that the vicissitudes ofenterprises, achievement quality depend on, to a great extent, whether theenterprise's governance structure is efficient. The development of thegovernance structure of familial firms is a process of dynamic evolution,which will go through the process from simpleness to complication, fromimperfection to perfection. Studying the decisive and influencing factorsof inside governance of familial firms of China, seeking key factors thatrestrict inside governance, promoting the improvement of governancelevel of familial firms of China, improving the whole competitivecompetence of enterprises of our country, not merely has a greattheoretica...