Study Of The Family Business Governance Issues

According to life cycle of family firm, the family firm will go through three stages called newly established period , growth stage and mature period. But from governance angle to the development of ownership and right of management, its evolution will go through five kinds of situations: the family owns total ownership and right of management, the family owns part ownership and total right of management, the family owns part ownership and most right of management, the family owns part ownership and small-part right of management, the family owns part ownership and no right of management. Because the family owns total ownership and right of management of the newly-established family firm, then the family firm in this stage is a interest community taking blood, relative and marriage relationship as tie, which does not exist entrust - agent relation, so the question of company governance does not exist either. When the family firm enters the mature period, the socialized degree is relatively high and ownership is separated from right of management too much. Then the family owns part ownership and small-part right of management or part ownership and no right of management. The family firm sets up stronger relationship of entrust-agent and comparatively perfect governance structure, then it will take off the general characteristic of the family firm gradually. The family weakens the power of control and influence to the firm greatly and the governance question of the family firm approaches the governance questions of common enterprises at this moment. Only when the family firm is in growth stage, though the stock right has been still in concentration to no small extent, but in order to attract talents and raise the fund, so as to meet interior management and needs that business is expanding constantly, the stock right will scatter a certain degree, and the ownership and right of management will be in some kind of separation too. Then the family owns part ownership and total right of management or part ownership and small-part right of management. So during the course of growing up, in a situation that family members still controls the ownership, the pluralistic pattern appears in the ownership of the family firm. The main right of management of enterprises is still grasped in family member's hands, at the same time, senior managerial talents and technicians coming from out of family increases constantly too, and occupies some management jobs on the senior level. Family firm begins to exist entrust-agent relation in this stage, Contradictory conflict between the owner and the non-familyadministrators begins to take place. Meanwhile the dispute between the family members begins to appear for power and interests at the same time, then the enterprise will be in high-dangerous stage. It is family firm in growth stage that is the most characteristic and the most representative stage in life cycle of a family firm. The coordination question of interests among the family, the firm and the stockholder and the question of restraining family members are the important contents in this stage. A lot of family firms have already been in growth stage in our country. What this text studies is exactly focusing on the family firm in this stage.We adopt comparative analytic approach, case analysis approach and system analytic approach. On the basis of analyzing foreign governance mode of Third Rings, we put forward the governance mode of family enterprises in our country in growth stage, which suggests that Chinese family enterprises should set up Family Consultative committee. Through Consultative mechanism, the policy-maker can consider and balance interests of the family, the firm and the stockholder. What's more, the family firm should set up family council to restrain and educate family members, promote family culture and corporate culture to effective integration. The family firm also establishes the sound shareholders' meeting, board of directors, board of supervisors, manager layer at the same time, working according to the normal company progressively. Whether the family firm could spend growth stage and enter mature period smoothly or not, the key lies in balancing three interests, restraining and educating family members, substituting the current situation of "rule by men" with the normal company governance structure progressively.The research of this dissertation will help the family firm to use the systematic view to govern with the visual angle of coordinating, which offers a kind of new thought of comprehensive governance and method to family firms of our country in growth stage.