Research On Insider Control Of Alibaba

The central problem with the traditional theory of corporate governance is that roots in neoclassical theory lead them to focus exclusively on governance structures that facilitate the optimal utilization of existing productive resources and to neglect systematically the governance of the process through which resources are developed as well as utilized in the economy.On the basis of the extensive body of theoretical and empirical research on the economics of innovation,the underlying resource allocation process can be characterized as one that is developmental,organizational and strategic.A system of corporate governance supports innovation by generating three conditions financial commitment,organizational integration and insider control.Insider control is the basis of financial commitment and organizational integration.This paper first argues that insider control is beneficial to enterprises,then use Alibaba to demonstrate the theory why insider control is good for innovation.Business growth required the entry of venture capital,so the founder's stakes were diluted.The Alibaba Partnership helps founders control the enterprise.Alibaba has always maintained insider control.This paper first analyzes Alibaba's ownership structure and control structure to explain why Alibba has always maintained insider control.Then this paper studies Alibaba's financial commitment,organizational integration and strategic decision,to find out the relationship between insider control,financial commitment and organizational integration.Through the study the system of Alibaba's corporate governance,we can conclude that insider control is benefit to innovation and can help the managers formulate effective strategic decisions.Of course,any corporate governance is not perfect.At the end of this paper,we will point out the limitation and applicable conditions of insider control.