A Research On Governance Of Family Firms: Based On Social Capital

The family firms' assets scale have been developing unceasingly during its development of more than 20 years. the growth of its output value , retail sales in consumer goods , the payments of industrial and commercial tax and so on are all obviously higher than other economy components, contributing substantially to the growth of the national economy. However, the modern economic conditions put forward new requirements on family firms, the reasonable grounds on which the family firms have depended for governance have changed. The traditional structure of family firms governance was possibly no longer suitable for further developments of the firms. Considering such background above mentioned, this article conducted the systematic research of family firm's governance from the perspective of social capital , in hope to provide some clues to the improvement of the family firm's governance.The family firm's social capital governance plays an extremely important role in the current evolution of .the structure of corporate governance . Because China is long-term influenced by the Confucianism ideology , the social capital aspect is significant during the evolution of family firm governance. The degrees to which the social capital improves or hinder the development of family governance vary in different stages of the development of family firm. Only when the economic performance and insufficiency of the social capital has been clarified in the institution evolution of family firm , can we correctly understand the critical point and the boundary of the innovation of family firm governance.This article begins with the growth of family firm and the evolution of the family firm governance in china. then analyzed the unique characteristics of the governance structure in different stages of family firm and inspected social capital's role in different stages of family firm. Based on the discussion of major issue confronting the structure of family firm governance , we made a deep analysis of family firm governance, although on one hand ,we approve the importance of modern institution governance, we are not denying the necessity to reserve the active factors of traditional family firm governance .what we propose is to combine social capital with the active factors above ,in this way ,we may create a two dimension governance model of institution governance and social capital governance. We hope this mode may provide some clues to the innovation of family firm governance.The introduction of social capital and the adoption of dynamic research method is the distinguished character of this article. By comparing the roles social capital played in different stages of family firm governance. We provided references for the construction of governance structure in different growth stages. Further, we conclude that the governance structure of social capital alone is suitable for family firm development in early and growth period; but upon the maturity of family firm, as family firm gradually approaches standardization and institutionalization ,the physical scale of family firm is far more huge than in its early stages, and the administration also becomes complex ,the traditional one-way governance structure need to be transformed to the two dimension mode of institution governance and social capital governance.