Relations Contract With The Family Business Governance

There are many family firms in a wide range of social and economic life. Family firms have shown great vitality , no matter in the developed countries or in the developing countries. According to statistics of Fortune 500, about 1/3 of the enterprises are family firms. In the United States, more than 90% of enterprises are family firms or family-controlled businesses, and more than 1 / 2 of the GNP and employment opportunities are created by family firms. After 20 years of development, Chinese family firms have become an important component in Chinese economy. The question is why there are many Chinese and foreign enterprises still favor such a perceived "inefficient", "backward" enterprise system, rather than taking over the modern corporate system arrangement with more efficient and full of growth potential? The only possible explanation is: " Competitive economic system is the result of people's behavior, rather than the result of human design " .The existence of family business and development must be reasonable.After 20 years of development, Chinese family firms have become an important component in Chinese economy. However, compared with the family firms of the developed nations in the world, the growth of family firms in China is facing difficulties, "SME" seems to have become a synonym for the Chinese family firms. It has been an important topic to the private economy and even to the development of the whole national economy that how to improve the performance of a family firm.This article is made up of five main parts to study the family firm governance. At first background, methods, innovation and inadequate were proposed in this paper's research. And then theoretical study of family firm was reviewed, the connotation and characteristics of the family firm and the current research situation at home and abroad, as well as development tendency of research were analysised. Based on the theory of family firm governance , the contractual nature of the family firm and general law of relational governance for family firm in terms of relational contract. The core sections of this paper is the fourth chapter, according to the seperation degree of ownership and rights of control for family firm,the model of family firm governance was analysised in terms of relational contract. Finally, the particularly and the choice of Chinese family firm relational governance were analysised combined with the growth history and unique environment of the Chinese family firms.