Research On The Principal-Agent Mechanism And The Corresponding Optimizations Of Samll And Medium-Sized Family Enterprises

The adjustment in China's development strategy in 1978 had provided favorable conditions and foundations for the economic growth,especially for the development of small and medium-sized enterprises(SMEs).Since then,the SMEs in the country have entered a whole new chapter.As the development keeps moving ahead,a series of problems and shortcomings of SMEs have gradually emerged:First,they usually go under within a short period of time;Second,it's difficult for family businesses to grow into large-scale ones;Third,their methods for corporate governance are relatively outdated.These issues have,more or less,deterred the advancement of SMEs.The preliminary findings,based on literature guidance and practical observation,have pointed the root cause of such problems to the defective principal-agent mechanisms of these enterprises.In response to this issue,this paper has mainly studied the small and medium-sized family enterprises(SMFEs)in China,and explored the principal-agent mechanisms during their development in an attempt to pinpoint the problems and causes,so as to the find the corresponding solutions.The research ideas of this paper are as follows:First,proposes the research arguments and elaborates on their necessity based on the related theories;Second,thoroughly analyzes the status quo of China's SMFEs,especially their principal-agent circumstances,to find their shortcomings and problems in this regard,as well as the causes behind;Third,with the causes of the problems in mind,uses the successful experiences,ideas and methods of Shanxi merchants as a reference to propose suggestions for improving the principal-agent mechanisms of SMFEs.After research,a few conclusions have been reached in this paper.First,the key factors of the principal-agent mechanisms of SMFEs lie in the side of business owners who have performed the entrustment.Also,this is the main cause for problems and the main target for future improvement.Second,management and ownership should be reasonably separated to improve the status quo.Last,the following countermeasures and suggestions are proposed for family business owners to optimize their principal-agent mechanisms:First,business owners should keep enriching and updating their knowledge;Second,they should build personal integrity and give professional managers full trust;Third,establish an effective withdrawal system for their family members;Fourth,develop an effective incentive and restraint mechanism for professional managers.By taking the above measures,the two entrusting parties can build mutual trust so that their respective responsibilities and duties can be better assumed to jointly develop the enterprises.