Research On Principal-agent Relationship Of Domestic Small And Medium-sized Family Enterprises In Business Owners Perspective

The scholars consider that family-owned enterprises is the most universal type ofbusiness, especially in China’s private enterprises, most enterprises are family-ownedenterprises, among which the number of small and medium-sized family-ownedenterprises is the most. Since the reform and open policy, China’s small andmedium-sized family business has developed rapidly, making a significantcontribution to China’s economic take-off. At the same time, in the growing process ofsmall and medium-sized family business, there are also some problems, such as shortcorporate life, foreign managers are intolerable, imperfect corporate governance, andso on. These problems, to some extent, restrict the development of small andmedium-sized family business. Based on these above, according to the main problemsand development difficulties of China’s small and medium-sized family business, westart our research by analyzing the principal-agent relationship of small andmedium-sized family enterprises, and to explore its main principal-agent problems,trying to find a solution to the main problems of the growth of China’s small andmedium-sized family enterprises that are facing.Based on principal-agent theory, we first give out a brief description of thebackground and significance of this study leads to the study of the research status quoat home and abroad, and analyzes the connotation of the principal-agent theory, themain points of view as well as its applicability in the family enterprises analysis,building a family business agency relationship framework as the core of small andmedium-sized entrepreneur. As following, we describe different definitions ofdomestic and foreign scholars on family enterprises, we also definite China’s smalland medium-sized family enterprises in this article. At the same time, in the analysisof small and medium-sized family enterprises mainly external, internal agencyrelationship based on its internal agency relationship, focusing on the use ofprincipal-agent model are discussed in detail in different stages of growth agencyrelationship evolution.Then, the analysis of the departure from the status quo of China’s small andmedium-sized family enterprises characteristics, combined with its existingprincipal-agent problems, the commissioning party-based business owners perspectiveto explore the cause of China’s small and medium-sized family businesses existmainly due to principal-agent problems, from entrepreneurs to seek a solution to the principal-agent problems. Finally, according to the conclusions of the study and bydrawing on the history of Shanxi Merchants’ successful management experience. Wereconstruct the relationship of small and medium-sized family entrepreneurs in twoaspects: one is self-improvement of the Principal entrepreneurs, the other is reformand improvement of the family entrepreneurs.We get two important conclusions as following: First, as the principals,enterprises have take advantages over agents in the relationship of small andmedium-sized family enterprises, who are the main cause of the agent problems, andthe self-improvement of whom is the key to reconstructing the principal-agentrelationship. Second, by drawing the successful experience of Shanxi Merchants inhistory, in the present situation, domestic small and medium-sized family enterprisescan separate the ownership and management right effectively, and establish mutualtrust mechanism for entrepreneurs and managers, so that enterprises can continue togrow and develop.