Study On The Three-dimensional Interlocking Professional Management Mechanism Of Family-owned Businesses

With the rapid development of China's family-owned businesses, their management of patriarchal system and the hiring policy,which appoints people by favoritism but not on their merits, can't fill in with the needs of their development. So the ownership and management are required to be seperated and social human capital (professional managers) should be introduced to extricate from the difficult position that at present, the performance of the professional management mechanism of China's family-owned businesses is not satisfactory, and there are some conflicts between family businesses and their professional managers. 90 percent of private businesses in China are family-owned and the majority of them are run by family members. The average life expectancy for China's family owned businesses is 2.9 years, which is much lower than that of the foreign family-owned businesses,24 years. One of the most important reasons is the inconsistency among family-owned businesses, professional managers and the society. Therefore, this thesis paper discusses the relationship among family businesses, professional managers and the society. Utilizing the theory of business life cycle and the theory of principal-agent, this paper analyzes the main problems of the professional management mechanism of family-owned businesses such as, immature professional manager markets, immature professional managers, inadequate incentive and constraint mechanisms, the lack of credibility for professional managers. Based on the analyses, this paper puts forward to the Three-dimensional Interlocking Professional Management Mechanism among family-owned businesses, professional managers, and the society. It is concluded that the mechanism can guarantee the eternal development of family-owned business. Then the suggestions to establish the mechanism are also put forward for reference.