Research On SMEs’ Governance Structure Based On The Institution Environment

Governance issues exist in SMEs. Governance issues are result from the separation of capital owner and managers by the agency problem in classical corporate governance theories. For SMEs the agency problem does not exist so SMEs have nothing to do with governance issues in their eyes. In fact, the essence of governance issues is to resolve conflicts in cooperation with the owners of physical capital and human capital. From this perspective, governance issues exist in SMEs seriously particularly in respect of shortage of financing and human resources. Building a well-functioning governance structure to protect the property ownerships of different owners and to stimulate and supervise the owners is helpful to solve these problems. From the fact of governance structure of SMEs in different countries, there are many differences, which is difficult to explain from the single market factors, because political and legal factors, social and cultural factors and technical factors affect the governance structure of SMEs too. The institutional environment affects SMEs’governance structure and the present governance structure is adaptability and selection of the institutional environment for SMEs.From the fact of financing and human resource problems of SMEs, the thesis reviews the corporate governance theory. Because of the complexity of the Small and Medium-sized Enterprises, the thesis chooses to explore the SMEs’governance structure from the perspective of institutional environment. From reform and opening up to now, SMEs’governance structure has been changing too much in China. The thesis selects two groups of samples including65small and medium-sized listed companies and66big listed companies to analyze and compare the governance structure of SMEs in China’s SMEs in order to sum up the problems of governance structures for SMEs in our country, which the Multiple Linear Regression Equation is used to explain the effectiveness of SMEs’governance structure. Then the thesis analyzes the function how the institutional environment affects SMEs’governance structure and the reason that institutional environmental leads to the problems of governance structures. The thesis then compares the differences of governance structure and institutional environment of SMEs among the United States, Japan, Germany and South Korea, which affords references for us to improve the institutional environment of SMEs.The conclusions are as follows:1. Governance structure exists in SMEs as it does in big companies but the form is different. Classical schoolars mainly focus on corporate governance structure because they believe that the governance problem comes from proxy or principal-agency problems, so theorists generally believe that the governance structure has nothing to do with SMEs. In fact, as the cooperation of capital and labor in enterprises, it is necessary to face the problems of property protection and how to motivate and restrain the owners of different capital, which are the main contents of the governance structure. The governance structure for corporate is mainly about designing a scientific and rational allocation of rights and responsibility-sharing structure and defining clear role and status of shareholders, board of directors, board of supervisors and managers to achieve the harmony of the shareholders and managers, which aims to solving the conflict between finance owners (including shareholders and creditors) and human capital owners (including managers). For SMEs, designing such governance organizations is questionable and maybe increase the transaction costs, but the concept of governance structure can help alleviate the problems of resources shortage because the governance structure can do something to solve the conflicts.It is necessary to explore a kind of appropriate methods to solve such problems of SMEs.2. The institutional environment can influence the formation of governance structure of SMEs significantly, but each insititutional factor effects governance structure in different ways. The institutional environment includes four elements, such as political and legal factors, economic and the market factors, social and cultural factors and technical factors, which will influence SMEs’governance structure in different patterns. Political and legal factors play a mandatory role to influence governance structure for SMEs by determining the property and incentive and restraint structures; economic and market factors will affect the governance structure of SMEs through competitive and pricing forces; social and cultural factors will exert a subtle influence on SMEs’governance structure by determining the stakeholders’behavior and habits; technological factors will improve the level of information sharing of SMEs as it can decrease the governance cost of SMEs. So changing the institution supplyment will help SMEs improve their governance structure.3. There are much differences in the governance structure of SMEs in different countries and the differences are the adaptation and selection to different institutional environments, which will give us reference to adjust the governance structure in China. In fact, the given governance structure is the response and adaptability of the institutional environment for SMEs. In the other words, the institutional environment has a significant influence on SMEs governance structure. At the same time, each country will push the institution changes in order to promote the improvement of the governance structure of SMEs. Based on the comparision and exploration, the government and other authorities should do more to improve the institutional environment for SMEs in our country.4. Pushing institution changes can improve SMEs’governance structure in our country, and the innovation of SMEs’governance structure is necessary. It’s hard and impossible to establish a standard governance framework or structure to ensure SMEs develop sustainably and achieve effective governance objectives. At last the thesis proposes some advices from the perspective of policy recommendations and the innovation of governance structure to help SMEs improve the governance status.The possible innovative views of the research can be concluded in the following three aspects. First, the thesis brings the governance structure into SMEs to broaden the definition of governance structure. Based on putting forwards the problems of financing and human resources of SMEs, the thesis explores the underlying causes of these problems in order to solve these problems according to the corporate governance theory. Because of the complexity of the SMEs, the thesis chooses to explore the issue from the perspective of institutional environment. The research gives the definition of governance structure for SMEs as a series of institutional arrangements of internal and external stakeholders, which pursues to promote the formation of a series of structural elements to achieve the objective of corporate governance. Second, this thesis explores the mechanism of institutional environment affecting the governance structure. The given governance structure is the response and adaptability of the institutional environment for SMEs. In the other words, the institutional environment can influence SMEs’governance structure significantly. In order to improve the governance structure of SMEs, we must pay attention to changing institutional environment and improving the governance structure from the perspective of the institutional environment supply. Third, the author gives some advices including policy recommendations and governance structure adjustment of SMEs in order to promote and improve SMEs’corporate performance in our country from the reference of foreign countries.