As for the family business to play a role in the economic growth of the growing, form or governance structure of such a system has also been more and more people’s attention. But for family business research goals and priorities is not clear, the definition of family business there is a vague understanding of family business governance arrangements and institutional change or the evolution of research also requires a solid theoretical framework. This family business research on these fundamental issues is reviewed in order to provide a reference for later study.
I. Introduction
Since reform and opening, China’s political, economic, social, technological and cultural undertakings have made remarkable achievements in various fields had a huge change. Family business as a form of organization has become an important part of the Chinese economy and an important force for economic growth. The existence and development of family business has its historical roots, but also to follow the logic of evolution, history and logic of unity. As the family business to play a role in the economic growth of the growing, form or governance structure of such a system has also been more and more people’s attention.
Statistics show that family businesses in national economies occupy a very important position. According to Craig E. Aronoff and John L. Ward’s study in the United States, family enterprises to create more than 60% of the GDP and employment, creating a nearly 90% of corporate tax; the German economy, Europe’s SMEs, mainly by small and medium constitute a family business, the German business model that a typical SME in around 1970 and dominated the German economy; in South Korea led a consortium of large consortiums of economic patterns in the national economy to occupy a dominant position, and mostly large consortia controlled by the founder and family members, such as Samsung, Hyundai, Daewoo and other income in the $ 35 billion in large-scale consortium; In China, the family business along with the development of private economy has become an important part of the market economy. Before 2000, the state-owned economy, foreign investment and industrial output is almost the total industrial output value of the private economy after 2000, the state-owned economy and foreign investment and industrial output value of the ratio of private economy rapidly diminishing, the basic form of state-owned economy, foreign economic and private one-third of the world economic pattern, and, from the incremental point of view, the private economy is much larger than the contribution to economic growth in the state-owned economy. The end of 2001 private households in China has exceeded 2 million, employing 2714 people, the private sector increased 24.65% in the amount of tax, the private economy has become China’s economic growth in the most economic power, the number of the private economy is not only the rapid increase in and expanding, extending survival.
At the same time, people management and family business governance structure and its path of evolution into question, criticize, and predict. Su Qilin and other family-owned business by the South Korean group’s research, the consortium of Korean management of familial long and painful process, no doubt in the “owned” a large number of family businesses in the context of the formation and development has given us a profound revelation, that must not underestimate the dangers of family management; scholars believe that the family business ownership structure of the unified and closed, ownership and management of serious overlap, low-level personnel structure, soft constraints of traditional family ethics principles of organization makes it difficult family business access to business resources for further development, expansion of a business development constraints, have limited corporate boundaries; “the rich, but three generations”, “three generations of the demise of law” is viewed more as the evolution of the law of the family business, family business in the “generation of entrepreneurs , Conservative second and third generation die, “the cycle of struggle, especially in academic research struggling. ① there appears to be the family business was eventually replaced by the modern enterprise system, primary, primitive, inefficient form of organization or institutional arrangements or governance structures (most of the literature describes the implied conclusion is true). Craig E. Aronoff, and John L. Ward (1995) article “Family-ownedbusinesses: A thing of the past or the model for thefuture” gives us a serious question: is the family business behind, closed, inefficient or obsolete synonym or future model? since it is outdated model, why in the economic growth and economic development, especially in the context of China’s transition economies, family businesses play an irreplaceable role, and this model has the field to the other penetration and expansion of the trend? If the model is the future, and why there is life size and the bottleneck? If the model is the future, the family business efficiency? family business system and the characteristics of the modern enterprise system is the heterogeneity and how it affects evolution? “three generations of the demise of law” is law or myth? what kind of theoretical framework of the family business? theory of the firm’s latest developments are taken into account and adapt to family business research? and so on. I believe that these are worth discussing and studying the great practical and theoretical significance of the problem.
As Western countries and China’s social system environment, cultural background and economic background is different from the perspective of family business research is also different. In general, the literature on family business research focuses on the definition of family business, family business management strengths and weaknesses of the analysis, family business issues of agency and governance structure, inter-generational family business succession, family business and the growth path evolution of the external social system environment (trust framework, capital markets, and cultural origins, the transition economies background, market manager, the legal framework of property rights) and growth of family business governance aspects of the impact. This article from the definition of family business, family businesses and family business governance structure and other aspects of the path of evolution is reviewed.
Second, the definition of family business
The boundaries of the family business content is the starting point and basis for logical analysis, only the targeted content analysis was to avoid ambiguity. We can often see the family business, private enterprises and private enterprises mix. So, what is the family business?
Foreign scholars on the definition of family businesses there are three typical elaboration. First, from Gerisuck (1997) in the “family business of breeding,” a book mentioned in the ring model, three-ring model of the enterprise, ownership and family placed in a three separate and cross the family business system description a family business shareholder, family members and the complex interrelationships between employees, explaining the family business conflicts, contradictions and power limits of the causes for the family business we understand the meaning and the complex relationship between family business research provides a tool; Gerisuck also believes that, regardless of the family business or a family member named high-level institutions in the enterprise, an enterprise can not determine which is the family business. To determine the family business is family-owned business ownership, that ownership is the family business was founded to master, is the division of family businesses and non-family business standards. Second, American business historian Chandler (1987) in the “visible hand – U.S. business management revolution,” a book on the family business definition: “the founder of the family and its closest partners (and family ) has been vested with most of the equity they and managers to maintain close personal relationships, and retain high-level management, the main decision-making power, especially in the financial policy, resource allocation and the selection of senior staff in. “That is, as long as the family control a majority stake and control the financial policy, resource allocation and manager selection of the highest decision-making power such as the right, and managers to maintain a close personal relationship, is the family business. Third, from Astachan and Shanker (2003) use of “bull’s-eye model” of the family business three proposed definition refers to the inner layer is defined as the family business for generations of people directly involved in family business management, multi-generational family of more than one successor is responsible for corporate management; middle layer is defined as the family business means the business enterprise entrepreneurs tend to pass to future generations following, business entrepreneurs and successor companies, while others only have shares or work not only on the board daily operation and management in the enterprise; outside layer is defined as a family involved in business management but only to control the direction of corporate strategy. Taken together, that is family-owned enterprise shares to participate in the management and control of strategic business development direction of the business is family business. In addition, Astrachan, 1WachoviaChair of Family Business at Kennesaw State University.Klein2Lecturer at Trier University, ProMit, DepartmentMittelstand? Konomie. And Smyrnios (2002) proposed a “FPEC” model, from the power (Power), experience (Experience) and culture ( Celture) to measure the degree of influence of the family enterprise that should not be family businesses and non-strict distinction between the family business.
China scholars from the perspective of ownership and control over the family business definition of elaboration. My view is that Taiwan scholars Ye Yinhua enterprise with three conditions can be identified as the family business. One family ownership is greater than the critical ratio of shareholding ratio; the second is a second degree family members or within the family as the company’s chairman or general manager; three of the company or a third-class pro-family members within the family as a director seats more than the company more than half of all board seats. Cao Dejun (2002) that family business is the company’s ownership or control over the attribution of ownership of one or several families or family-owned, and can have ownership or control over the legal transfer of ownership in the offspring of the organization. Li gauntlet (2003) writes in the article, the so-called family business, an enterprise assets and shares (50% of decision-making power) among the main control in a family, the leadership core of members appointed by the same family, internal management color with a strong family enterprises or enterprise groups. Chu Xiaoping, Huai-Zu Li (2003) in the published article pointed out that the family business is dominated by the family assets, family rules and business combination rules. Ownership and control of its performance as a continuous situation, including the separation of ownership and control can not be held in the form of close family members to the business listing and management of enterprise assets to maintain critical control over the enterprise. Its size can be as small family-run workshop can also be large enough to become a “business empire”, which roughly form a single proprietorship, home (court) family members of the family shared a pure system at home (court) family members of the family members to absorb the pan pan-family system and its capital, the home (court) family members to maintain control over the joint-stock companies, and even the family to maintain critical control over listed companies, in several forms. Li and others in the concept of the family business, family business is based on marriage and kinship as a link to the formation of economic organizations, enterprises and sources of capital accumulation or the business based on family background above. Family business can be divided into three types, namely all the family type (family, a business owner, but does not participate in the business), family business type (family not a business owner is only responsible for the management of enterprises), mixed ( family members not only have full or partial ownership, and full or partial control of the franchise).
The author believes that the definition of family business should look for a logical analysis of the decision the family business and have become the family business is different from the properties of other organizations, we must first identify the “family business” is near — “enterprise” to determine the family business is a kind of enterprise, the family business on the business of a broader concept of being; Second, we must clear the nature of business, that is the nature of business property; again, the family business with other companies to compare, identify with other The difference between business, family business is different from other kinds of bad business. In this way, we can use a logical approach to the nature of business and family business and other types of business to the family business with a poor definition. So, corporate character and nature? Company’s most notable feature is the price mechanism of the alternatives, the existence of business is to save transaction costs, is a trading contract kink, a coordinated allocation of resources to rely on executive orders Compact. Different transaction attributes and governance structures to match different, so there are different kinds of poor corporate existence of the salient features of the governance structure is built around the ownership, control and residual claims and the formation of relationships between stakeholders. Now let’s analyze what the characteristics of the family, I believe that the family has to descent-based narrow understanding, but also contains a descent-based relationship between the family and ethical standards based on broad understanding of the family. The reality of the actual situation of family businesses make it easier for people to choose the latter understanding. Therefore, this article is defined as: family relationships and ethical business relationships based on descent-based organizational forms, based on ownership or control as a means to control the residual claims of the family as the ultimate goal of the collection of a series of contractual relationships. From the definition, the family business and other businesses there are two kinds of difference, one to race relations and the ethical basis of the relationship, and second, family-controlled residual claims as the ultimate goal. This definition is more fitting of the actual family enterprises in China.
Third, the family business governance structure and its path of evolution
(A) research on the governance structure
Governance structure of family business studies from the analysis of the merits of the family business began. Turning to the governance structure of this paper is about the business of all participants and stakeholders ownership, control, residual control rights and residual claims of the configuration of a set of checks and balances and institutional arrangements.
We can on the pros and cons of family enterprises and modern enterprises in comparison, see the governance structures of the two main differences, the different status of Chinese family businesses governance structure. First, ownership structures. In most of the equity in the family business and family or property set, and external definition clarity, owner of the enterprise is the decision maker, President and General Manager from one of their number, few set supervisory board, supervision is also controlled by the family, assets and property of the family enterprise has no strict limits. Many scholars think this ownership structure forced decision makers take carefully of behavior and not lazy of behavior, avoid or reduce has because information not symmetric and not specification, and limited rational and opportunism and caused of adverse effect, and ownership, and control right and supervision right separation Yu shareholders, and Manager people and supervision who of modern enterprise governance structure compared, effective to reduce has delegate-agent cost, and supervision cost and decision cost. Second, owing to the family business was based on descent and ethical relationship as the foundation of enterprise organization form, modern enterprise and thus a large number of shareholders, executives and employees have different structure and Foundation of trust, trust structure of family enterprises more easily benefit-sharing, the spirit of shared risk and reduce the difficulty of coordination goals; In addition, the altruistic tendencies so that family members of the family members of residual claim of ownership-based beliefs and engaged in the pursuit of maximizing the enterprise value of activities, even hired professional managers, can effectively prevent actions contrary to maximize enterprise value for professional managers. Because altruistic doctrine of exists, makes family enterprise of incentive and constraint mechanism double of, while is enterprise of official system, on the altruistic doctrine promotion has communication and cooperation, reduce has family agent of information not symmetric, makes family enterprise than relies on official contract and legal constraint Foundation Shang of modern enterprise, more can savings transactions costs and cooperation game of interests, this in family enterprise of founding stage especially so. Three is a family enterprise’s organizational structure is “different patterns” form of centralization, entrepreneurs is the core of the family business around this core is to have a blood relationship and ethics of relationship management, perimeter is a grass-roots management and ordinary employees. Shareholders, the Board of Directors of the General Assembly, and modern enterprise management, supervision and checks and balances of decentralized organization structure is different, family businesses can not only meet the acts of uniformity and consistency of management decisions, more can enjoy quick decision-making and frequent, uncertain risks against the benefits. Early in the family business created, only possible choice is the choice of the family system, rather was the result of comparison of different institutional arrangements for performance differences. Because investment of nature is material capital owner and human capital owner Zhijian elements right transactions of activities, but because people of limited rational and information of not said, in transactions Shi impossible foreseen to future of various contingent status, for avoid because opportunism and caused prior of “reverse select” and afterwards of “moral risk”, for savings because parties caused of high of transactions costs, substances capital owner and human capital owner on may appears refused cooperation. Also, due to the ideal of social trust structure and family factors, family enterprises select the owner believes the maximum saving transaction costs, reducing the harm of opportunism and the best system for achieving family ideal.
However, the family ownership structure of single and closed, caused two problems, is difficult to integrate social material capital and human capital, the second is the family firm property right on the outside world is clear, but property rights has become increasingly blurred between family members may, for the realization of scale expansion and diversification of property rights, or even have a significant negative effect on the enterprise life; Family business right in one or two, have also caused contradiction between entrepreneurship and enterprise scale, and as companies expand the possibility of wrong policy decisions on the scale of increase; In addition, in the survey, we found that the trust structure of family enterprises benefit-sharing, the spirit of shared risks and benefits of altruism to enhance communication, cooperation, exclusion and social integration and enhancement of human capital and offset by downside confrontation brought about by the family business.
For family businesses governance structure problems that exist, many scholars have put forward their views. Lv Zheng, Guo Chaoxian (2001) in the study mentioned that family to be out of the closed-end management of family businesses, capital socialization and Management specialization and standardization of corporate governance, namely, achieving diversification of property rights, the introduction of social and material capital; Achieving separation of ownership, the introduction of professional managers of management companies; Establishment of Board of Directors, supervisory board, playing the role of decision-making and oversight institutions. This is a typical view. Gerisuck (1997) by mentioned of three ring model to enterprise, and ownership and family placed a three who mutual independent and mutual cross of family enterprise system, for we understanding family enterprise of connotation and the research family enterprise complex of relationship provides has a tools, while author think, three ring model also implied has a views, is based on enterprise of interests, ownership can diversified, ownership and control right can separation, but maintained family of cohesion to get family interests and Enterprise interests of total win of governance structure is best of system arrangements, abroad family enterprise of family Committee such of governance structure is is for this purpose. Think of this article, three-ring model implies, is a family enterprise governance structure feasible, realistic and win-win Road, is the second road.
(B) research on the path of evolution
For the evolution of family enterprise, foreign scholars from history, legal system environment of enterprises and organizations, capital market and the relationship between the evolution of relations, the evolution of organization reform of economic and socio-cultural environment and study of the evolution of family enterprise in the light of the concept of social capital and institutional change. Many scholars in China are mainly from the cultural background, social capital and system arrangement of modern enterprise system is the best in a given context, transformation of family business governance structure, which forecast path changes and evolution of family enterprise in China.
Chandler (1987) in the visible hand-United States revolution of enterprise management through a number of case studies of United States history of enterprise growth, demonstration of classic enterprises (family business) to the evolution process of modern enterprise. Foreign scholars on the legal environment and study on relationship between capital market and the Organization evolution of family businesses, mainly concentrated in a few areas, adverse selection and moral hazard is on the capital market and family enterprise growth, analysis of public behavior in the capital markets; Second, capital markets and private discussion on the relationship of the proceeds of the right of control; Third, legal environment and discussion of the relationship between corporate ownership and control arrangements; Four are capital market pricing mechanism and analysis of the evolution of family enterprise in the light of the differences in lending rates. Concluded that it is, as capital markets gradually developed and perfect, right in one or two classical-modern family enterprise of the enterprise to the separation of ownership and non-family business evolution. Angle of view of social capital, mainly the rational spirit of capitalist economic system and social trust resources on family enterprise to modern enterprises with regard to the important role played by the evolution of research. Recent studies show that family obtained by evolution to modern enterprise is the pros and cons of both. Berghoff, and Hartmut (2006) article published in “TheEnd of Family Business? The Mittelstand and GermanCapitalism in Transition, 1949-2000 “pointed out that the Germany economy SMEs, consisting mainly of the family of small and medium enterprises, Germany the typical SME business model from around 1970 it dominated Germany’s economy, has the following features: clear right to ownership and management, emotional investment between employers and employees, for continuity, patriarchy, stressed on independence. This began in SMEs in the 1860 of the 19th century model with fundamental changes in the economic and socio-cultural environment changes. In this process, the enterprise also lost many traditional characteristics accordingly. Now SMEs operating in the modern business model make them less dependent on family, have more access to external finance channel, to better demonstrate its openness and internationalization trend, but at the same time, we should also note that they cannot be guaranteed, as in the past long-term and stable business prospects.
Scholars in China on the path or the evolution of family enterprise system changes and there is no convergence of views, is a family enterprise in our country should establish a modern enterprise system. Lv Zheng, Guo Chaoxian (2001) that the emergence and development of corporate enterprise, is a product of height development of productive forces in China, to a certain stage of development of a certain size of private family enterprises to the modern corporate system transformation is not in the objective law of the people’s will as to transfer. Perspectives on the evolution of the family enterprises should establish a modern enterprise system have also been criticized by many scholars.
Pan Bisheng (1998) in the Veterans ‘ organization referred to the study, is in accordance with the family business, family business enterprise’s family to the evolution of family enterprise’s path. Family business enterprises subordinated to and serve the interests of the family and run the rules of family enterprises is a family run rules to obey and serve the interests of enterprises and, the former is the primary stage, which is an advanced stage of cases. Chinese scholar lizhan book (2003) believe that Chandler made the second form should be the reform of family enterprise in the light of modern enterprise system, enterprise development can have a number of options. Modern enterprise system is the family of the so-called second State still holding relative or absolute, family members still participate in the senior management of the enterprise, to a certain extent, family still controlled by the enterprise control. However, a majority of senior management in the enterprise and even the General Manager is a family member, the basic realization of socialized, enterprises become family members and professional managers in the common management of modern enterprises. Chu Xiaoping, and Li h.z. (2003) believe that how the core of family enterprise’s growth and integration of social capital, business growth is the essence of effective processes of integration of social capital, firm growth disorder is is not an effective integration of social capital, interruption of decline is the fusion of social capital in the enterprise. Social capital has a mutual relationship of four levels consisting of: social capital, social capital, human capital, social networks and social capital of culture. Growth of family enterprises are not all follow a path of development, some basic form to save the family business, but with other types of Enterprise Networking Alliance; Some may remain in a certain stage of growth of family enterprises, or even remain pure family patterns; Some enterprises may across the stage in the process of growing up, some can grow in Vietnam but was eliminated for a node; Some can jump between different paths in development. Peng Xiaohui (2006) from the modern contract theory, that China’s family enterprises from the family, property rights elements constitute the Pan family network, the core capital of the State governance mechanism of China family enterprise path for regime changes. Comprehensive study on the evolution of family businesses governance structure and its path, in my view, is to coordinate economic activities of an organization of the market, the enterprise is the coordination of economic activities of an organization, the market is a mechanism for configuring resources, configuring resources can businesses institutional arrangements. Enterprise system is the number of economic agents trading in game produced a compact set of kink. This institutional arrangement are also a number of family enterprise game outcome of a transaction between economic agents, whose existence is reasonable. Arrangements on the objective of the Organization and efficiency of the system of run the vital role of efficiency of the administrative structure of family enterprises is the basis for sustainable growth of enterprises, or governance is the basis for growth. Family business governance arrangements with external social environment. Phenomenon of diminishing the efficiency of the system, reducing the efficiency of the governance structure of family enterprises to a certain extent, change of the governance structure was necessary and essential. But as the West developed social systems, environment and social system of our country environment there is a difference, evolution paths of Chinese family enterprises and family businesses in Western developed countries also vary; As in the developed Western economy occupies an important position in the family enterprise system and modern enterprise system and the coexistence, China family enterprise to the evolution of inevitability to the path of the modern enterprise system; Similarly, as from the Western developed countries has a localization and innovation of modern enterprise system in China as in the process of, family businesses governance structure optimization and evolution path is also a combination of better play its role in alternative markets and social systems environment saving transaction costs of the innovation process. Modern enterprise system in the future may also contain more content.
Problems in the four, the family business research
Peter f. Drucker in the era of great change in the book of Management pointed out that the United States and other developed countries is controlled by the family and the management of most enterprises, but the book is almost entirely about the management and professional management for public enterprises, and seldom referred to the family-owned businesses. Chinese scholar Prof. Chu Xiaoping spoke in a 2000 article, long neglected the study of family business, is a major flaw of the field of Economics and management in China, people’s differences in family enterprises, mainly because of the people on such rationality and efficiency of management of an enterprise organization there are different views on my country, the study on theory and practice of family enterprise has special significance. Visible, research is only in recent years the emphasis on family business, but had still not given sufficient attention.
In the study of family enterprises in our country there are also problems or defects. In response, Su Qilin, and Zhong Naixiong (2006) gives an objective generalization: “two contempt, two lack, a paradox”, I believe that there is “a vague”. Namely: underestimate the research of Chinese family enterprises, underestimate the transition economy background; Lack a systematic study of clear objectives, lack of standardized application of economic methods; Study of Chinese family enterprises trust paradox; The fuzzy definition of family business. The author believes, on the family business in three areas of study are as: efficiency of Pareto efficiency and Nicholas Kaldor and the arrangements for the governance of family businesses and institutional change; Cost-benefit analysis method and efficiency and choice of family business governance structure; From the system of transitional economic dimension, dimension of the environment, corporate ownership, family dimension, the dimension dimension, comprehensive study of the dimensions of the right to control process of the formation and development of family business governance models.