Study On The Performance Of Business Group’s Governance Based On Bilateral Coordination

The governance of business groups has been the hot focus in the theory circles. But the existing literature on the governance of business groups is mostly concentrated in the rules and boundaries, diversification and foreign governance, the studies on the governance modes of business groups are few. Business groups as network organizations are different from the simple market organizations and business organizations. So we can’t simply use the existing corporate governance theories, we require the combination of network organization theory research. We divide business groups’ governance modes by the way which we appropriate the resource and how we coordinate the enterprise based on the study of governance modes of business groups. Through the empirical models we evaluate the governance performance of business groups, this can also help businesse groups choose the applicable governance modes. By this way we can thereby establish a set of compatible organizational structures and operating mechanism.Data samples of this study are from the220annual reports in the listed group companies of Shanghai and Shenzhen Stock Exchange in2010. We deeply discuss the connotation of the governance modes of business groups and study the distinguishing feature of the two patterns of bilateral coordination-vertical resource appropriable relation and bilateral coordination-vertical resource appropriable relation. Then we make a number of assumptions about their relationship in accordance with the relevant theories. As for research methods, we use descriptive statistics to preliminarily analyze vertical and horizontal resource appropriable relation of bilateral coordination and related variables. Through correlation test we find independent variables will not cause multicollinearity problem, so it is applicable for regression analysis. In the subsequent regression analysis, we select the rate of return on net assets, shareholders’ income and return on assets to measure corporate performance by regression analysis. Six regression equations were obtained from the two modes. At last, we use factor analysis to compare the overall performance of these two resource appropriable relations of the business groups.The conclusions show that either the relationship between vertical or horizontal resource appropriable relation and the business groups’ performance was negatively correlated. The degree of vertical resource appropriable relation and the business groups’ performance is negatively related. The degree of horizontal resource appropriable relation and the business groups’ performance is negatively related. The impact of the degree of the vertical resource appropriable relation on business groups’ performance is bigger than the impact of the horizontal one. The study suggests the more narrow the resource occupied area of the business groups and the fewer the business units, the less unit cost of companies and the better the governance of business groups. In the existing governance environment in our country, the governance pattern of bilateral coordination-vertical resource appropriable relation is relatively better.