New Governance Model Of Private Enterprise Development

Private enterprises in our country have been characterized by "immaturity" for many yeas. This situation is inseparable from family-based governance system, which is firmly rooted in private enterprises because of the influence of the history, the national conditions, and the traditional culture in our county.Family-based governance has its unique advantages in the establishment of a business, but numerous enterprises' rises and falls have illustrated that family-based governance is suitable for not the development, but the establishment of an enterprise.The development of market economy and the coming of globalization in economy have provided private enterprises with both ample chances and unprecedented challenges. Facing to more and more complicated condition, private enterprises are hindered by family-based governance system in decision making, human resource development, capital collection and other aspects. Therefore, the new situation demands private enterprises transform their governance system from family-based governance into modern corporate governance.The business life cycle theory, the principal agency theory and the theory of institution and regulation in management also indicate that private enterprises should set up modern corporate governance system after the separation of the rights of ownership from the rights of control.Modern corporate governance system is characterized by stock-holding, scaling, institutionalization and scientificalization. Private enterprises can transform the governance system from family-based governance into modern corporate governance by means of decentralizing property rights, setting up multi-subjects' monitoring and controlling system which is held by family, formulating institutions for management, reforming and improving the incentive mechanism to managers, perfecting the manager hiring and firing mechanism and founding a learning organization inside an enterprise, and etc.