The Impact Of External Equity Investors On The Growth Of Family Businesses

Many facts show that the family business is one of the most dynamic and growing private economic organizations,a country's economic development and social progress has an important impact and contribution.Professor David S.Landes of Harvard University is highly praised for the "family business" form,and the book affirms that "family business" has made great contributions to world development.(1998)and others also pointed out in the book at the end of the 20 th century,65%-80% of the world's enterprises are owned or operated by the family,and there are many families in the world's top 500 Enterprise[1].Bahrain,Rothschild,Morgan,Ford,Agnelli,Toyota,Rockefeller,Hong Kong Lee family and many other legendary family such as Morningstar shining in the history and modern sky,continue to give new entrepreneurs hope to dawn,And lead to a generation to start a business,the accumulation of wealth and the formation of a new family heritage.In the past four decades since the reform and opening up in China,the market,business opportunities,capital,technology and other elements such as Zong,He Hengjian,Ma Huateng,Ding Lei and other entrepreneurs to make full use of,and thus formed a hundred years of China's family business situation The According to Forbes Chinese network statistics,as of January 2016,2827A-share listed companies,there are 1784 private companies,of which 55.3% for the family business.In addition,the family business outside the stock market is more difficult to count.We can't ignore that family business has become an important social force of China's economic development nowadays.China's economic and capital market changes continue to challenge the growth and development of the family business.The reform strategy of the state supply side is devoted to the thinking of the development and innovation of the industry.The re-examination of the financing mode of the examination and approval system is also reflected in the regulation and health guidance of the government's financing activities.From the trend of capital market development,in the protection of fair,just and efficient under the premise of increasing the credit support for the growth of SMEs,to encourage equity capital directly into the enterprise is undoubtedly the future of China's capital market development of the important principles.China's family business is the main force of small and medium-sized private enterprises,representing the community of entrepreneurship and innovation of spontaneous enthusiasm.However,the moral support of the government and society alone is not a long time.How to choose the capital financing strategy in the process of reform is the main point that the family business must pay attention to.Wal-Mart,Matsushita Electric,Lee Kum Kee and other well-known family business history has shown that the introduction of external equity investors to ease the pressure on resources to enhance management efficiency,so as to protectenterprise innovation and sustainable development is the family business survival and growing an important factor.However,in the limited size of the Chinese capital market,the family business equity capital expansion process is always full of contradictions.Holding families are hoping to maintain ownership concentration,control the business,and eager to fully absorb the external equity capital to break their own capital constraints,risk diversification,and promote rapid growth of enterprises.Thus,the issue of equity financing in China's family business is attributed to-should the introduction and the introduction of external equity capital? From the connotation,the former requires the family business to consider the equity financing motive,the latter is reminded to consider the realization of equity financing.Today,these two types of issues have been widely watched.Throughout the family business from the initial family-style small businesses to all the family members to manage the business,and then to expand the scale of enterprises gradually into the non-family members to control the lifeblood of enterprises,and ultimately by absorbing a wide range of social capital to the traditional family business evolution For the development of ordinary public companies,the control of the family through appropriate decentralization to external equity investors,and in exchange for excellent external capital to protect the development and expansion of enterprises has become a must.In the process of rapid development,how to choose the type of external equity investors? To determine the absorption of the object,the number of families at the expense of the power in exchange for external resources involved? Different types of external equity investors,respectively,on the family business management of what impact? These questions are worth exploring.This paper starts from the motive of introducing foreign equity investors from family business,and studies how strategic investors and financial investors divided by investment purpose play a role in family business.By screening the 153 families of small plates and GEMs with declining family control,the data of the year before and after the dilution of control were first compared,and the data from the second to fourth years after the dilution were analyzed.The structural equation analyzes the short-term impact and long-term impact of the holding of external equity investors on the growth of family business.It is found that the involvement of external equity investors can immediately and effectively alleviate the resource constraints imposed by the family enterprises,but it will take some time to promote the growth of the family business.In the current capital market,China's capital supply is tight In the pattern,the Chinese family enterprises should give priority to attract financial investors,and then gradually introduce strategic investors;financial investors through the deprivation of family ownership,strategic investors through the deprivation of family management and play a role.The main innovation of this paper lies in: First,the empirical verification of the "resource constraints-external equity investors involved-family control dilution-family business growth," the role of the establishment of the path,taking into account the family business of high control preferences Theoretically verifies the feasibility of attracting external capital by family enterprises.Second,the division of external equity investors from different investment objectives is the financial investors who are financially interested in the development of external equity investors.And strategic investors,and empirical test of their differences in the growth of family business role,help the family business to identify and carefully select the appropriate for the enterprise development plan of the external equity investors;Third,proved that the involvement of external equity investors can Short-term effective mitigation of family business resources constraints,and for the growth of the family business has a hysteresis to promote the role.We provide a useful reference for the family business more smoothly corporate with the external equity investors.In the follow-up study,the author will consider the impact of social emotional wealth on the basis of this research framework to further highlight the uniqueness of the family business.