Corporate Governance Of Chinese Family Firm: Based On Static And Dynamic Perspective

Family businesses are the oldest organizational form of firms and nowadays they are still ubiquitous and active all over the world. Researches of family business have both historical connotation and realistic significance. Since the economic reform, family businesses, as the main form of private sectors, have significantly contributed to economic growth and market reform over the past three decades in China. But after the start-up stage, most Chinese family businesses are facing many new problems when they entering into the scaling development stage. Good corporate governance plays a very imporan role in family firm growth.The family businesses are composed of two overlapping systems:the family and the business, each system has different interests, norms, values and structures. To trend these two systems is vital for healthy family relationships and the firm's prosperity. Family business should introduce the dual governance structure to governance both family and business at each stage. In this paper, basing on the static and dynamic perspectives and along with route of "Status quo-Evolution Trends", the author will analyze the" corporate governance of Chinese family business " through theoretical analyses, field investigations, typical case studies and quantitative analyses in order to explore the following three questions:First, the current situations of corporate governance of Chinese family firm; Second, the relationships between the corporate governance of Chinese family firm and firm performance; Third, the evolution and the trend of Chinese family firm'corporate governance. The main findings are as follows:Through empirical analyses of large samples and typical case studies of Hong Kong Chinese family firm, we can see that the Chinese family firm is still an efficient form of enterprise organization at the present stage. The existence of a large number of family firms is an integral component for the economy. For the family firm, the separation of ownership and control need both appropriate internal and external conditions.Empirical analyses of large samples reveal that the main issues of the family firm is neither the dispersion of ownership nor the dispersion of control, but the bottleneck is more likely the scarcity of management resources. Nepotism and informal management system have seriously affected the family firm efficiency and survival. With a certain percentage of ownership, the owners should open management positions gradually.At the same time, it is also important for the governance of family firm to improve management capacity within the family firms by various means.The owner-type governance stage is the initial stage of the family firm governance. The hybrid governance stage is the intermediate stage of the family firm governance, while the modern type governance stage is the advanced stage of family firm governance. Through the typical case studies of mainland and Hong Kong Chinese family firms, we find that the Chinese family firms are the kind of the first two types. Its future development trend is that co-existence of the owners-type governance stage and the hybrid governance stage, with a large number of family firms will move toward hybrid governance stage.Overall, the conclusions of this research will contribute to deeper understandings of evolution and transformation of corporate governance of family firm, the relationships between corporate governance structure and firm performance and also the dual family firm governance issues. It will also have theoretical significance for family firm's growth. In particular, the possible innovations of this research are as follows:First, to compare the family firm and non-family firm in Zhejiang Province to research the basic relationship between the corporate structure and the performance using the field investigation data, the results provide the optimization for Chinese family firm corporate governance and the sustained growth capacity with theoretical and empirical evidence. Second, the author point out that the dynamic evolution is the basic characteristics of corporate governance of Chinese family firm basing on corporate life cycle theory, and to build a five-dimensional structure model to analyze the dynamic evolution of family firm corporate governance structure. Research results will help deepen our understandings of family firm governance and the law of its evolution. Third, to put forward that co-existence of family governance and corporate governance constitute the basic characteristics of family firm governance, and the dual governance of family firm characteristics is examined by the typical case studies. The Research enriched the researches of corporate governance in family firm field.