Study On The Activation Mechanism Of Group Fault Zone In Family Business Governance Transformation

As the major forms of private enterprise, family business is faced with the difficulty of governance transformation. During the transformation of corporation governance, group faultlines will arise because of multi-attributes heterogeneity and allocation of control rights in corporate governance team, leading to members conflicts even control rights contention. So the topics of coexistence of corporation founders and professional managers are always popular in family enterprise governance. It is important to focus group faultlines during governance transformation of family enterprise because of that.As the new angle of organization behaviors researching, group faultlines theory is general focused by many scholars. With the development of this theory, mystery of group fualtlines activation has not been revealed. Like dormant geology faultlines, the power of crust movement and the strength of geology faultlines may work together to activate dormant geology faultlines and lead to earthquake. So dormant faultlines can’t affect organization behaviors, the outside power and the strength of faultlines may activate group faultlines and affect organization behaviors actually even lead to conflicts. Due to this reason, researching the mechanism of group faultlines activation has become imperative. It not only riches the theory of group faultlines, but also provides theory support to governance transformation of family enterprise.Based on that reality, we propose the central questions: During the transformation of corporation governance, how group faultlines are activated in family enterprise governance team? What are outside forces and inside conditions in group faultlines activation? How these factors affect the process of activation.In consideration of central questions’ type, principle of typicality and data collection, we uses case study methods based on control rights conflict of Gome Ltd. First, we define the concepts of group faultlines, control rights, activation of group faultlines and so on. Accounting for the meaning of this research, major contents, researching methods and innovation points. Secondly, we start literature review and comment briefly on it. Thirdly, based on Hypothesis of Social Man, we explore the formation and measurement of group faultlines. At the fourth place, we put forward evolvement process of control rights during the transformation of corporation governance and define the status of control rights allocation. Based on that, we synthesize the analysis of control rights allocation and group faultlines to build a function of activation efficacy and a model of group faultlines activation. Finally, we try to explain this model through the case of control rights conflict of Gome Ltd, revealing the process of ‘dormancy——activation——restoration’. Then we offer several advisements about management policies.Through analysis of theory, logic inference and case study, we can get some conclusion: First, the allocation of control rights is outside force to activate group faultlines and the strength of group faultlines become the inside conditions of group faultlines activation. Second, if the strength of group faultlines is stronger and the control rights is dispersed, the group faultlines will activate easily. By the contrary, if the strength of group faultlines is weaker and the control rights is centralized, the group faultlines will activate difficultly. As the conclusion of that, we should insure the rationality of control rights allocation and the strength of group faultlines to prevent activation of group faultlines, then we can avoid team conflicts even control rights contention.