The Influence Of Family Members’ Power Concentration On Family Enterprise Diversification

Family enterprise is an important part of Chinese economy, it has made an indelible contribution to the rapid growth of Chinese economy. Chinese family enterprise prefer to choose diversification as a way of financing to expand their operation because of some historical and political reasons, so family enterprise have a higher diversification. Previous studies for the reasons of family enterprises’ diversification often treat the members of the family as a whole, ignore that different power distribution in the family members will produce different diversification decision. In order to make up for this, this paper uses empirical research to establish contact between family members’power concentration and family enterprise diversification, thus it concludes the relationship between them.In this paper, the research is divided into two parts:theoretical research and empirical research. In the theoretical part, firstly the paper determines the definition of related concepts by reviewing the related literatures; secondly it concludes the present situation of family business diversification by data analysis and case analysis; finally it classifies and analyzes the diversification reasons from family characteristics’ perspective and finds that present research neglect the family members’power concentration, after that it establishes a theoretical analysis model and provides theoretical support for subsequent empirical research. In the empirical part, firstly this paper collects and processes146family enterprises’data through2008to2010; secondly it analyzes the data by descriptive analysis, correlation analysis and regression analysis; finally it gets the main conclusion as follows:(1)Family members’ownership concentration is negatively related to family enterprise diversification;(2)Family members’control concentration is negatively related to family enterprise diversification; (3)Family members’ kinship concentration has significant relationship with family enterprise diversification.Base on the above conclusion, the author puts forward a series suggestion for family corporate governance. Finally, this paper still has some shortcoming because of the limitation of experience and resource, but believe this will get further improved in the future.