An Analysis Of The Metivation And Performance Of De-familiarization In Enterprises

As an important component of the Chinese economy,the proportion of private economy in the national economy is increasing year by year,and family businesses,as a major branch of private economy,are also crucial for the future development of the Chinese economy.Most family businesses complete the transfer of management rights through intergenerational inheritance,where the second generation of children enter the company to replace the first generation of positions and complete the inheritance.But currently,more and more family businesses are choosing to implement de-familialization and transfer management rights from family members to externally introduced professional managers.By implementing de-familialization,the restructuring of management can be completed,thereby reforming the original organizational structure,optimizing work processes,and improving supervision and incentive mechanisms,gradually improving the efficiency and value of the enterprise.This article takes Mingfa Group as a case sample to study the process,motivation,and impact on corporate decision-making and performance of its defamilialization.The process of de-familialization mainly occurred after the suspension crisis,when the family members of Mingfa Group announced their resignation from their board seats,and completed the restructuring of the board of directors by introducing external professional managers to their original seats.However,throughout the entire process of de-familialization,family members still retain equity control over the enterprise,only to retire from behind the scenes and no longer be responsible for specific business management.In terms of the reasons for Mingfa Group’s de-familialization,it can be divided into two parts:internal and external factors.The external factors are the increasingly tightening policies and market environment in the real estate industry outside the company,as well as the new regulations introduced by the Hong Kong Stock Exchange that have imposed delisting pressure on Mingfa Group,which has been suspended for several years.The internal reasons are mainly the declining business performance of the company after the suspension,the increasing debt repayment pressure,and considerations for the illegal behavior of closing family members.By comparing with other family businesses in the same industry,it can be found that after the implementation of the de-familialization measures,the newly established management team of Mingfa Group has changed some of the decisions and institutional arrangements under the original family governance,implementing decisions such as slowing down the development of new real estate projects,slowing down the pace of land acquisition,reducing borrowing levels,selling equity in affiliated enterprises,establishing a risk committee to improve internal control systems,and increasing information disclosure.In terms of performance,the longterm market response of Mingfa Group after the implementation of de-familialization is still relatively negative,with significant improvements in profitability and debt paying ability,while the changes in operating capacity are not very significant.Through the case of Mingfa Group,it can be shown that when facing crises,family businesses can implement de-familialization by introducing professional managers,restructuring the knowledge system,management experience,and skill structure of the enterprise management,improving decision-making and execution efficiency,and ultimately achieving effective response to crises.Family businesses will face crises and challenges to some extent on their development path.The original family governance is no longer applicable to mature enterprises,and may even bring more serious problems to the enterprise due to the original family governance,such as family members encroaching on the company’s interests and causing the company to fall into scandal,causing huge damage to the value and reputation of the enterprise.At this point,introducing external professional managers to implement de-familialization can serve as a new approach for enterprises to cope with crises.I hope that the case study in this article can provide certain reference value for the business development of family businesses in China,and enrich the current research on de-familialization.