Research On The Institutional Innovation Of Family Enterprise In China

Family enterprises were the earliest of the type. They are still a current enterprise form, which is the greatest in number, the most complicated in internal structure and relationship, and the most different in dimensions, and they take on various development patterns. Many nonpublic-run enterprises, which have rapidly developed since the reform and opening to the outside, have showed great vigor and strength, and they play a great role in the national economic development. On the long run, they will be indispensable parts in our market economy, and even affect the development of our society. In fact most of them belong to family enterprises. Because of specific historical and cultural factors, modern family enterprises in China grew not long ago, most of them are rather small and technically backward. The phenomenon that "The richness will never last three generations"are quite common, esp. before the challenges after China's entry to WTO. Family enterprises are confronted with many embarrassments, barriers and contradictions at present, and they are eagerly hoping for theoretical guide. Just as Albert Roseman pointed out, family and consanguinity have every reason to constitute the first topic of Chinese studies. Therefore, the studies of family enterprises in China are of great theoretical and practical significance. Based upon the exploration of current institutions of family enterprises Chinese specific characteristics, and foreign experience, this dissertation is intended to seek for a new route of institutional innovation suitable for the sustainable development of Chinese family enterprises. This effort will provide important references for the government and promote the development of family enterprises and nonpublic economy. Based on the analytical methods of institutional economy, and the tools of economics, management and sociology, this dissertation makes a general exploration and analysis of family enterprises in China. All these are carried out by the combinations of substantial and normative, dynamic and static, macroscopic and microscopic analyses. This study mainly deals with the rational tendency and patterns of the institutional innovation of family enterprises in China from the viewpoints of the institution of property rights, the management structure of enterprises, innovational subjects, impetus and efficiency. Finally the dissertation puts forward a strategic formation and feasible scheme. Chapter I: A brief introduction. This part brings forth the basic thinking route, study methods and some innovations based upon a comprehensive narration of the studies at home and abroad, together with the purpose and significance of this study. Chapter II: Family enterprises and institutional innovation. According to previous studies, the writer puts forth her definition of family enterprises: They are economic organizations based upon basic ties of family contracts, and family members control the power of ownership and management. They include different enterprises whose ownership and management are compactly tied, and whose members keep a critical control over the enterprise stocks after they occur in the stock market. As to the rational existence of family enterprises, "family"is supreme in the Chinese people in a cultural sense, and "family culture"is still in the core of Chinese behaviors. There is a high sense of trust in family enterprises. In an economic sense, the altruism between family members is the source of saving transaction costs. Institutional innovations of family enterprises have their individual specific rules in property rights, management structure, innovation subjects, power and efficiency, thus they have become the guarantee of their development. Chapter III mainly discusses the birth , development and actuality of Chinese family enterprises. Chinese family enterprises were backward earlier from Hui to Jin businessmen, and "Foreign Affairs"Campaign brought Chinese family enterprises to birth quickly. Moreover ,this chapter analyses the sprout, the birth, the development, the grandness of Chinese modern family enterprises. The subjects of property rights have a super-economic feature: the structures of stock are highly centered, the governance structures power-centered, but the restriction system has not formed. Chapter IV mainly analyses the institutional innovation on property of Chinese family enterprises. The variance and innovation of Chinese family enterprises were lag. According to the institutional innovation theory, the way of Chinese family enterprises institutional innovations were to optimize the structures of industry ,to build modern enterprise institutions and to separate the ownership and management right. Chapter V mainly analyses the structure of Chinese family business's governance. According to "three-ring mode"theory and Gersick's theory, this chapter discusses the contents and structures, and puts forward the reestablishment and the combinations of Chinese family enterprise governance. Moreover, the author analyses the international business governance's revelation and benefit to Chinese family business. Chapter VI is the analysis innovational subjects of Chinese family enterprises. This part points out that entrepreneurs are the root of enterprise existence and the innovational subjects. They have a high sensitivity and judgment of the latent profit opportunities of institutional variance. The entrepreneurs are the real subjects of institutional innovation. Then this partdeals with the three dimensional mechanisms and their interrelations of the institutional innovation of family enterprises in China—human capital, material capital and social capital. This part also refers to the characteristics of entrepreneurs of family enterprises, and puts forward a viable suggestion. Chapter VII analyses the power of the institutional innovation in Chinese family enterprises. On the basis of the relations of technological, institutional and management innovation, the chapter analyses the demand of the institutional innovation in Chinese family enterprises systematically, including international action. Moreover the related institution choices are put forward in the chapter. Chapter VIII analyses the efficiency of the institutional innovations in Chinese family enterprises. On the basis of the decision efficiency theory of institutional innovations and the efficiency reduction law, the chapter deals with the validities and defects of the administration structure in Chinese family enterprise. Furthermore, the boundary suitable models of Chinese family enterprises are advanced. And the transitional paths of the family enterprise institution are explored. Chapter IX poses the strategic conceptions of promoting institutional innovation in Chinese family enterprises. On the basis of the conclusions above-mentioned, the chapter points out that the family entrepreneur's self-innovation is the key of the institutional innovation in Chinese family enterprises and the property right institution building of modern enterprises is in the core. At the same time, the transition of government action is the important guarantee of the institutional innovations in Chinese family enterprises. Bedsides the overall institutional arrangements of the institutional innovations in Chinese family enterprises are put forward. On the basis of improving market economic environment and strengthening enterprise self-developing ability, the chapter establishes one big motive-the profitable drive and the entrepreneur's strategic innovational concepts, straightens two big relations-the family relationships and the agent relations, unites three mechanisms-the confidence of enterprise and government and market. Finally, the chapter explores and demonstrates the measures of driving the institutional innovations in Chinese family enterprises on the basis of the property right institution and the models of enterprise governance. Study and research can be boundless. While I tried in this dissertation to discuss the issues on the institutional innovations of Chinese family enterprises, my observations could be only partially the truth and any comment or argument is much appreciated.