Family Business: A Formal System And Informal System Of Cooperative Governance

The family business has been the hotspot of research in the whole world as the family business has got huge achievement and Southeast Asia has grown up.The studies about the value and development of the family business are the focuses among these studies.We think that as a enterprise form,the family business is neutral.So the more significant to our study is to find the problems in family business and solve them in order to help the family business get sustainable development.In our study we try to get to the roots of the objection of the family business mainly at the angle of institution.Institution is necessary to enterprise in that it help form the economy order in enterprise. Formal institution and informal institution make up of the institution and they have many differences in forming,implement mechanism,changing and so on due which these two kinds of institution have played different roles in corporation governance. They also have complementary relationship beside differences.So neither the governance depends entirely on formal institution nor the governance depends entirely on informal institution is effective and effective corporation governance needs they govern coordinately.Influenced by the culture of law and contract,the family business in the west emphasizes contractual governance.Different in the west,the family business influenced by the family culture in China pays much more attention on informal institution in governance.Though the governance of Chinese family business based on informal institution has its advantages,it faces many challenges from the changes of environment and has been in trouble.We believe that one of the effective measures is to build the mode governed coordinately by formal institution and informal institution.