The Basic Characteristics Of Business Associations' Governance In China On The Basis Of Empirical Evidence From Guangdong And Zhejiang Province

Chambers of commerce and industrial associations (collectively referred to business associations) play an important role in the market economy, as a third-party governance mechanism between government and market. And the role performed by business associations mainly relies upon the improvement of their organizational governance. As a kind of mutually beneficial non-profit organizations, business associations not only possess the general features of non-profit governance, but also have their own unique characteristics.This paper analyzes basic characteristics of business associations' governance comparing with the frame of corporate governance. It is typical weak governance in business associations, considering the lack of interest-oriented ownership and market pressure caused by the nonprofit character, the diversity of governance objectives, the weakness of incentive mechanism and the mutual governance between the organization and its members. However, weak governance doesn't means low efficiency; its performance not only depends on the governance structure, but also relies upon whether business associations could take good use of their unique social capital to overcome the disadvantages of physical capital and formal rules.According to the questionnaires investigated in Guangdong and Zhejiang Province, this paper demonstrates the existence of weak governance through empirical test of business associations' governance in China. Furthermore, it evaluates the performance of weak governance utilizing factor analysis method, and finds that only half of the business associations in coastal areas in China have good performance; the top three factors which have influenced the performance are human capital, industrial representation and the ability of serving organizational members. Case studies are also used to analyze the non-quantifiable factors which have impacts on governance. Finally, related suggestions are proposed on how to better the governance of business associations on the basis of theoretical analysis and empirical test.