Classification comparison and evolution of family business governance models

LYU Hongjiang1 WU Liang 1 ZHOU Yingtang 2

(1.School of Economics and Management, Southeast University, Nanjing , China 210096)
(2.Nanjing Agricultural University, Nanjing , China 210093)

【Abstract】The root of the problem of family business governance model lies in the establishment of the trust mechanism. In the process of family business growth, different development stages need governance models with different matching trust mechanisms. But currently, there is little research investigating the effects of trust mechanism matching at different stages. From the angle of trust mechanism matching at the initial and continuous stages, this paper divided the family business governance models into kinship type family business governance model, etiquette type family business governance model, contact type pan-family business governance model and contract type pan-family business governance model. By constructing simulation models of these four types of family business network, it is found through comparison that the etiquette type family business governance model is the most efficient in resource exchanges, the contract type pan-family business governance model has relatively better resource exchange efficiency and fairness, while the kinship type family business and contact type pan-family business governance models have lower resource exchange efficiency. This paper analyzes the factors that affect the resource exchange efficiency by using overall social network characteristics such as the network clustering coefficient, network centrality, and tie strength. On this basis, the evolution of family business governance models is summarized into the three stages of etiquette, pan-family, and contractual.This finding of this paper has important guiding significance for the Chinese family businesses that are currently in the peak period of intergenerational inheritance.

【Keywords】 initial trust mechanism; continuous trust mechanism; family business governance model; social network;

【DOI】

【Funds】 Project of the National Natural Science Foundation of China (71472036) Project supported by Jiangsu Province Social Science Foundation (15GLB010)

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This Article

ISSN:1006-480X

CN: 11-3536/F

Vol , No. 12, Pages 123-139

December 2016

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Abstract

  • 1 Introduction
  • 2 Types of family business governance models with matching trust mechanisms at different stages
  • 3 Construction and simulation of family business network models under different governance models
  • 4 Comparison and analysis of the resource exchange efficiency of family business networks under different governance models
  • 5 The evolution of family business governance models
  • 6 Conclusions and recommendations
  • References