Relationship Of Family Involvement And Firm Performance

As the earliest form of enterprise appeared in human history, family business is the indispensable subsidiary factor of the feudal regime and the economic life in the ancient Chinese society. After the founding of new China, the Chinese family business had disappeared or hidden in a disguised or latent form limited by policy. People gradually formed a negative view of family business, family business became the synonymous of closed, backward and inefficient. Since the Reform and Opening up policy, the private enterprise has been rapid development. While family businesses account for the majority of private enterprises. According to the data published by the “2013 China Modern Family Business Survey Report” which was released by the website of Forbes Chinese version, there are 1431 listed private companies in A Share Market, 711 of them are listed private family businesses which accounted for 49.7%. However, the phenomenon of the family dominance, agency conflicts, and family management team or hire a professional manager team and how to implement the plan of family business succession and other issues also have alternately exposed after family business listed.Based on Agency theory, Stewardship theory and Resource-based view, this thesis will study the family involvement which is the characteristics that family business different from other enterprises. And this thesis will be trying to explore the impact of family involvement on business performance. From family ownership involvement, family management involvement and family succession intention three dimensions, this thesis will explore the relationship between family involvement and enterprise performance. On the basis of reviewing and analyzing the existing research literature, this thesis puts forward six hypotheses about the influence of family involvement on enterprise performance. Through the empirical analysis to verify the six hypotheses, finally we get the following conclusions.(1) There is a significant U-shaped relationship between family ownership involvement and enterprise performance. Namely the proportion of family ownership has the certain critical range that family ownership involvement is the most detrimental to enhancing enterprise performance within the certain critical range.(2) There is a significant inverted U-shaped relationship between family management involvement and enterprise performance. That means family management involvement has the certain critical value or range, and will have negative impact on enterprise performance below or above this certain critical value or range. Through the ratio of family members of the top management team and the degree of family members participating in the top management team, we summarize the two optimal combinations of family management involvement.(3) According to the results of empirical study, family succession intention has a negative impact on enterprise performance. Especially the succession intention of family management, namely the second-generation family members involved in business management hinders the enhancement of enterprise performance.