An Empirical Study On The Relationship Between Top Managers' Internal Network And Firm Performance

With the transformation and upgrading of China's economic structure,among the private listed companies in China,the newly established enterprises lack of trading partners based on contractual relationship,and often rely on the blood relationship between entrepreneurs or the interpersonal relationship circle that can be trusted.Therefore,nepotism is common among senior executives in modern enterprises.Based on the "fate" cooperation,the relationship network among executives will have a certain impact on corporate governance.This paper takes the GEM listed companies in China as the research object,defines and measures the internal relationship network of the executives,analyzes the relationship between the internal relationship network of the executives and the corporate performance,and puts forward the research hypothesis,and then uses the sample data to carry out the empirical test.The main results and conclusions are as follows:Combined with the social network analysis method,from the four relationship dimensions of kinship,learning,geography and industry,the paper uses mathematical matrix to build the internal relationship network of senior managers,and uses the calculated network density index to measure the density of the relationship network.The higher the density,the closer the relationship between the internal senior managers of the company,the density is 0,indicating that there is no relationship between senior managers.(1)Combined with the social network analysis method,the internal relationship is divided into four dimensions:kinship,learning,geography and industry,and the internal relationship network of senior managers is constructed.The internal relationship network is replaced by the network density index.After calculation,the density value of the sample company's senior managers' relationship network is between 0 and 0.65,with the average value of 0.10.Most of the enterprise's senior managers have the relationship network and are relative close together.(2)Based on the theory of internal control and agency cost,the research paths of"internal relationship network of senior managers-internal control-enterprise performance"and "internal relationship network of senior managers-agency cost-enterprise performance"are established respectively.The influence mechanism of internal relationship network of senior managers on enterprise performance is analyzed and corresponding hypotheses are put forward.(3)Through the empirical analysis and test of the research hypothesis,the results show that:the internal relationship network of senior managers has no direct and significant impact on corporate performance,but through internal control and agency cost,two intermediary factors have negative and positive impact on corporate performance.On the one hand,the internal relationship network of executives reduces the performance of enterprises by reducing the quality of internal control;on the other hand,the internal relationship network of executives improves the performance of enterprises by reducing the agency cost.Through the comprehensive analysis of the two influence paths,it is found that the effect of internal control on corporate performance is greater than that of agency cost.This study can provide reference for enterprises to formulate management team selection strategies and internal control norms.It is beneficial for enterprises to balance the potential alternative relationship between formal mechanism and informal mechanism,so as to build the relationship structure of senior managers suitable for their own development,build an efficient management echelon,prevent governance risks and improve enterprise performance.