Power, Revenue And The Level Of Family Governance In Family Business

Family firm,as a kind of economic organization form,has a long history and is still prevalent without declining.Since China's reform and openness,family firms have been playing more and more important roles in Chinese economic and social development,especially in labor employment,social stabilization and economic growth.Therefore,research on the family business has become an important issue that can not be ignored.In this paper,we start from holding family,which act as the supreme decision-makers in family business.Based on utility theory,we create a tri-dimensional dynamic economic model,namely the double-pole model.From a new sight,we analyze how holdings family adjust power and revenue so that they can gain the best level of family governance and keep or increase total utility,which could as well as maintain the survival and development of family firm.We strive to seize the key pulse that dominates family firms' behavior,and build a rigorous and pragmatic organizational behavior theory on family business.In addition,we try to use this theory to a typical family business analysis.There are two main innovations in this article.Firstly,we establish a tri-dimensional dynamic economic model with the knowledge and principles in economics,mathematics,management science, psychology etc.Through the model,we can clearly and intuitively observe the holdings family's decision-making process.This study breaks through the past research only describing the appearance of family business.Secondly,we explore and put forward two-factor analysis structure(power and revenue),build a new framework on theoretical analysis.And in the course of model deriving,we create a series of terms such as the desire of power,the desire of revenue, the radius to measure power,the radius to measure revenue etc.,and then apply to research on family business.After this study,we have the following conclusions:Firstly,power and revenue,the two key factors of holding family utility,can exchange and integrate with each other.And the exchange ratio between the two factors is different at different stage of life cycle in family business.With the expansion of firm size,the desire of revenue will go up while the desire of power will decrease.Secondly,the exchange ratio between the two factors may be inconsistent because of such discrepancies as authoritarian fendencies and the holdings family's ability among family businesses,which results in deferent family gorernance progress.Finally,the road releasing power is from low to high and from outside to inside. From the introduction layer point of view,the lower profession manager would be early introduced into family firms compared with the higher profession managers. While from the introduction area point of view,the managers in beeline department will be early introduced into family firms compared with the managers in function department.