The Principal-Agent Relations In The Family Enterprise

With the changing of market economy and the intensifying of competition, family enterprises are growing and developing. According to the statistics, at present, family-owned enterprises account for at least 90% in the non-public economy in China. With the development of market economy, the family enterprises are widely concerned by scholars. How family Businesses abidingly develop has become the theoretical and practical issues.The trends of the global enterprises are the joint-stock enterprises. The main characteristic is that the separation of ownership and management, hiring professional managers to manage and operate the business. The family enterprises are no exception .In the progress of the shareholding, the family enterprises begin to emerge the phenomenon of non-family management. Family enterprises employ professional managers who act a principal-agent relations, this relation can be seen as a contract. In the contract, the family enterprises owners hire agents (Manager) to carry out certain activities, hand certain decision-making powers to the agent. In our country, the probability of success of introduction of professional managers in the family enterprises is very low. It is a very widespread problem. After more than 20 years of rapid development, our family enterprises have reached a fairly big scale. Fierce market competition requires family enterprises take a breakthrough in family model. Many family enterprises start introduce professional managers, but after resolving the professional managers "Come in" on the issues, they often ignore the question "how to use".At present, majority enterprises owners hesitate to introduce professional managers. Even the professional managers is "airborne", they can't get fully trust. There are many reasons: the managers don't understand the enterprise, their self-management level is low or other issues. But it is obviously the family entrepreneurs (Principal) should take more responsibility for the introduction of professional managers. The problem is entrepreneurs usually don't award enough trust or delegate enough power or hold the different cultural values. All those are the main content in this issue.The main point in this paper: due to the unique characteristics of the family enterprises, in the process of the cooperation between entrepreneurs and professional managers, entrepreneurs are gain the upper hand, entrepreneurs'action directly affect the efficiency of cooperation between the two. In this sense, family entrepreneurs fight themselves, creating a good space for professional managers in soft environment is fundamental to the bilateral cooperation. If the entrepreneurs can not be aware of it, make a correct position, it will lead to a lack of the credible principal-agent relations between the family entrepreneurs and the professional managers, cause the costs of principal-agent too high, and the difficulty of the transition from the family enterprise to the modern enterprise system.The paper is divided six chapters. The chapter one is the background, the theory and practice significance, the structure and the ways of this research.The second chapter is the new solution to the principal-agent relations in the family enterprise. First section it carries on the explanation and the evaluation to the mainstream principal-agent theory and the main theory viewpoint, in the traditional principal-agent theory, the arrangement of commission power is the exogenous random variable, but in the realistic situation, the reliability of this kind of assumption is extremely dubious. Second section explains the family enterprise's principal-agent relations and the present situation of the research. The third, argue the standard principal-agent theory is difficult effectively to explain the family enterprise's principal-agent question.Third chapter analyzed the key man in family enterprises - family entrepreneurs'significant influence as the main clients to the principal-agent relations which produced. First, it carries on the analysis to the special status of the family entrepreneur in the family enterprise and the important status in his family, and then minutely analyzes the influence to professional manager by entrepreneur's personal behavior. So this article believe, as a result of family enterprise's family characteristic, the family entrepreneur's behavior has affected the normal operation of the principal-agent mechanism in the family enterprise, causes the principal-agent mechanism difficult to root in family enterprise. Therefore, as the behalf of family enterprise, entrepreneurs should take more responsibilities.The fourth chapter is the case investigation to this article's main point. First section carries on the overall situation to the enterprise, second is the interview to business owners, third is the record of manager's interview, and fourth is generalized analysis of the case. It has proven the research's practical significance.The fifth chapter is put forward proposals to the research, considering family entrepreneurs should take the primary responsibility for restructuring family enterprise's principal-agent relations in our country. On the analysis of the Jin business's experience and the overseas family enterprise's development, family enterprise principal-agent relations'restructure needs entrepreneur's reform. If the family entrepreneurs want to keep in with professional managers, the most important is the entrepreneurs themselves. Their way of thinking and behaviors must change. Family enterprises should begin from within, strengthen the basis of efficiency of the principal-agent mechanism, improve the affinity of the family enterprises and the principal-agent mechanisms reduce the costs of the principal-agent mechanism, take the principal-agent mechanism as a endogenetic arrangement in family enterprises.The sixth chapter is the conclusion of this paper. It can be say that in the family entrepreneurs-professional managers (principal-agent) relations, the assumptions of the principal-agent theory that the commission arrangement exogenous could not establish. For Chinese family enterprise, the main contradiction is come from the principals rather than the agents. If the family enterprises want to achieve a great development, the entrepreneurs as the principals should take more responsibility and reform themselves.The innovation of this article lies in regarding the principal of principal-agent relations as the key of the contradictory of entrepreneur– manager, attempting to solve family enterprise question from a new angle, this is rare in the former research.In this paper, one of the themes is the family entrepreneurs (principals), the other is the relations between the agent and the principal in family enterprises.Because the individual ability limit and the time limit, the article still has some flaw. I hope to get teachers'criticism and suggestion in order to do further improve in future.