Family Business Growth Manager Selection

The existence and development of a family enterprise has its inherent advantages and rationality. But how to select the manager is a difficult problem to solve in the course of family enterprise growth. This paper divides family enterprise growth into two stages: beginning period and shaping period and then analyzes the determining factors and selection criteria for a family enterprise to select the manager in accordance with the characteristics of different stages.An anatomy of the Principal-Agent Theory and the modern Stewardship Theory leads to the findings that the principal agent is not a complete egoist and that a family member is not a complete altruist either. This paper tries to explain, by integrating the two above-mentioned theories, manager selection results under different circumstances with the growth of the family enterprise.A growing family enterprise is often faced with a manager selection dilemma. Selecting a family manager may result in the trust crisis between the present manager and the would-be one for lack of successor cultivating program; meanwhile, there is a limited choice of potential managers. On the other hand, selecting a professional manager may run a risk of a moral decline of both parties due to trust conflicts and also a risk of a high entrustment management cost.This paper brings forward manager selection criteria and the implementation approaches in the course of family enterprise growth and believes that the manager selected by the family enterprise is both an altruistic chamberlain and a trust-worthy principal agent of low cost. A family enterprise of beginning period tends to select a family manager while a family enterprise of shaping period, with the gradual separation of the two rights, is inclined to select a professional manager from inside or outside the enterprise.