A Research On The Mechanism Of Social Trust In The Transition Of Family Business

As a form of economic organizations, family business plays an important role in the national economy of every country. Since the beginning of the reform and opening policy at the 80s last century in the mainland of China, family business has grown for more than 20 years, achieving great success at the number, the output and the quantity of employment, while still facing the plight of small-scale, short-lifetime and high bankruptcies. For handling those issues, many firm-owners try to hire professional managers to change the firms into a modern ones with the separation of ownership and management, but few of them succeed.Some scholars attribute those fails to the low social trust in our society. Low trust impels the firm-owners and the managers suspect each other, holding the firms back from changing into modern ones. Therefore, our thesis will first analyze the trait of our family firms and social trust, structure a mathematical model based on the analyse before, then use relative economics theory to explain the mechanism of social trust in the transition of family business in a mathematical tone, and research the way how social turst influence whether the owner will hire a manager and other strategies like holding share and monitoring after the hiring at the method of mathematical reasoning. After those we draw a conclusion that high social trust will lead high firm-value, the firms-owners employing managers and share dispersion, while low social trust brings the opposition outcomes.As a whole ours thesis hasn't taken the way of case study like the present stage fashion, while that using mathematical model will be a necessary complement to the present research field, and also possessing innovation and application value.