Research On Power Centralization In Governance Of Private Enterprises

Since the reform and opening up, the private enterprises develop quickly and obtain an important position in China's economic development. However, with their development, the private enterprises are encountering more and more developing problems, among which, the biggest one is the centralization of power appeared in the governance process. With the expansion of the enterprise's scale, the management method of the enterprises should also be improved correspondingly, and modern enterprise's governance model should gradually substitute the original models such as small factories and individual workshops, i.e. the model under which the power is highly centralized gradually evolves into one under which the ownership is separated from the right of control. However, such a process is difficult, what's worse, many of the private enterprises'owners have not realized such a problem. Although the production value and scale of enterprises have been greatly improved and expanded respectively, yet they continue to use the traditional governance method. Because of this, defects exist in the governance model of the majority of private enterprises, and the centralization of power is the most serious problem. Centralization of power exists in the following three fields: the board of shareholders or the shareholders'conference, the board of directors and the executives. The centralization of power impedes the development of the enterprises and causes imbalance in the business management.Now, the definitions concerning the private enterprise vary widely in the study field. Under such circumstances, this thesis gives a completely new one on this problem. The characteristics of the private enterprises'administration structure is generalized and, the manifestations of centralization existed in the private enterprises are analyzed in detail. Centralization in the private enterprises can be divided in three fields: centralization of the strong shareholders, centralization of the board directors and centralization of manager's management. The centralization of the strong shareholders mainly refers to the deprivation of the medium-sized and small shareholders'interests and the control on the members of the board of directors. The centralization of the board of directors mainly includes the imbalance of the power within it, the narrow scope from which the directors come, and the non-prominent role of the directors. The over-control on the enterprise and the damages to the enterprise brought by such actions are the main manifestations of the centralization of manager's management. Centralization in the above mentioned three aspects generalizes such problems existed in the administration of the majority of private enterprises. With the hope of improving the administration structure and solving problems concerning centralization during the administrative process, at the end of this thesis, several major measures tackling centralization in the private enterprises are proposed, such as signing shareholders'agreement, ushering in the supervision of the banks etc. Only by such efforts can the opportunities and challenges in the new period be dealt with.