The Residual Control Succession In Family Business

As the main force of private enterprises, family business is playing an increasingly important role in the growth of the national economy. But the present family business is facing an important hurdle to maintain the development of enterprises: succession. The family business succession smoothly or not is related to its enterprise maintain evergreen or not, and even decides the survival of its enterprise. Therefore, the study of family business succession is urgent, especially studying the family business succession under the mainstream “father-to-son” model succession with Chinese cultural characteristics. At present, the research of family business succession has been emerged in endlessly, and the more focused is the study of power succession which is the core content of family business succession. However, the majority of current research is based on the time-point, and most of those researches studied formal power succession, including the management succession which characterized with position and the ownership succession which characterized with the stock right, and the study of the control succession is relatively deficient. The residual control as the core of control has more research value, but the existing research based on it is scarcer, and there is no research explicitly explores family business succession issues from the residual control. Therefore, it provides innovative research perspective for this paper: residual control succession. So the research emphasis is the important value of residual control succession for family businesses.In order to study better for the value of the residual control, this paper expounds the importance of the residual control and its configuration and its critical value for family business succession by conducting literature research for the related theory of the residual control and family business succession. And through the above analysis this paper roughly forms the viewpoint that the residual control succession is the nature of family business succession. Then, through the content analysis based on two family business succession cases Highsee Group and Galanz group, the residual control succession and residual control configuration elements are identified. And through that this paper investigates the inner mechanism why the residual control succession is the nature of family business succession, and indicates the phenomenon that during succession the residual control slowly configuration is more advantageous to the development of family enterprises. And in order to demonstrate this phenomenon has universality, this paper puts forward the concept of "power transition" to carry out the empirical analysis of the listed family firms which complete the succession, then discusses the three dimensions(management, ownership and control) power transition's effects on the performance of family business, and so as to state overall power transition effects on family business performance. Power transition actually reflects the residual control succession; therefore, it can show the relationship between the residual control slowly configuration and the family business performance.Through the content analysis, it can clearly find that the residual control's effective succession is the key determinants of family enterprises successful succession above analysis; only successor masters the residual control, he can achieve the real power of enterprises, so it can be systemically demonstrate that the residual control succession is the nature of family business succession. Deeply digging the inner mechanism, it can be found the support elements of residual control configuration determine that nature. The residual control configuration support elements is condensation of human capital and social capital, which are most important invisible resources to form the family authority, thus determines the nature significance of the residual control succession. Furthermore, by using the concept of transition for further empirical research,this paper arguments management and control transition have a positive effect to family business performance, and states overall power transition is conducive to the development of family enterprises. Power transition actually reflects the residual control slowly configuration, so it demonstrates the residual control slowly configuration has a positive effect to the development of family enterprises and its adaptation. Thus far, it forms a complete research system of residual control succession, and enriches the related theory of family business succession; the more important is providing practical advice for the family business succession.