Research On The Dual Governance Of Chinese Family Business Groups

Chiness family business groups are very common in emerging markets such as China and Southeast Asia, also they are very big companies and very diversified in various industries. Why these family business can accomplish growth from time to time. It is no doubt that the governance structure is very important, and the governance model of Chinese family business have become the hot spot both in academic cirles and practical circles because of the rise of Chinese economy.Dual governance structure is the most and foremost characteristics of Chinese family business, but the main literatures of family business governance neglect the "family" variable, which is foremost and key to family business. And the logic idea only focus on how the family involvement affect firm's value and performance, but did not research the mechanism which determine the involvement of family.This paper is following on the research structure based on "Institution-Behavior-Performance" method. The main theme is aroud the subject of "the dual governance of Chinese family business groups", illustrating the theme by "Family-Business groups-Firms". The entire research is defining on the following questions:First, the formation of the Chinese family business groups and their micro structure bases. Second, the theorical meaning, effecting mechanism and the change process of the dual governance. Third, the relationship between the dual governce model and business groups performance. This paper can enrich the family governance theory by pushing the logic chain of how family involvement affect business goups performance.With the literature review, the paper defines the theorical framework of the dual governance of Chinese family business groups. Following the framework. this paper collects the data of Chinese family business groups from Taiwan district(337 family members-20 biggest business groups-1665 firms), from Mainland China(572 family members-187 real public business groups-406 firms) and from Southeast Asia(37 family members-a 112 years old family business gourps-30 firms), with the hope that we can discovery the dual governance of Chinese family business groups by detailed comparisons.Corresspongding to the above three questions, the main conclusions of this paper are as follows:(1) For the formation the Chinese family business groups, the two micro bases have its effects respectively. The embeddness of the social contracts(the family contracts) and the economic rationality on the firm level have promoted the formation of Chinese family business groups. Which is the answer to question 1.(2) The governance strucrure of Chinese family business groups is a dual governance model, and its composition is different from the mainstream literature's research structure and conclusions, which is guided by the second generation literature of coporate governance. In the family governance, the family itself is the object of the governance, but in the coporate governance, the family is the subject. Which is the answer to question 2.(3) From the static perspective, the dual governance structure of the Taiwan district, Mainland China and the Southeast Asia not only have similarities, but also differences. The similarities are as follows:the governance mechanism of the allocation of the ownership, control and management between family members, the pyramidal holding structures et al. And the differences are as follows:the family succession, the way of how to holding et al. Which is also the answer to question 2.(4) From the dynamic perpective, the dual governance structure have continue in the overseas Chinese family groups for a very long time. The single-line of the management revolution which is mentioned by A.D.Chandler, is very hard to occur in the Chinese family business groups. Which is also the answer to question 2.(5) From the empirical studies, this paper finds that, the firm's performance is best when it is managed by "owner+other family members", and less when it is managd by owner only, and less when it is managed by other family members, and less by the professional managers. Also the performance of public firms in the business groups are superior to non-public firms, the relationship between layer and firm performance is negative. And the core company's ownership on the firm performance is not clear, but the separation of ownership and control of the core company on the firm have negative effect on its performance. Which is the answer to question 3.The innovations of this paper are as follows. Firstly, to explore the detailed family data, and to construct the framework of dual governance of Chinese family business groups. Secondly, to study the performance differences of the firms which are belong to the same business groups. Thirdly, for the first time, to use the business groups from Taiwan district in domestic studies, and the first data which is collectd by the field investigation.