The rationality and limitations of the family system of private enterprises?

1. The rationality of the existence of family enterprises in my country at the current stage

In reality, business entrepreneurs first choose the family system and do not carefully compare the performance differences of various systems. The result of their choice is the institutional choice they have to make when starting a business.

The need to broaden financing channels

The investment activities of capital owners in enterprises are essentially transactions between physical capital owners and human capital owners regarding the right to use factors. Since the quality of human capital is difficult to observe and quantify, in order to avoid transaction risks under information asymmetry before investing, owners of physical capital often require entrepreneurs to provide sufficient asset mortgages and good business records that can prove their entrepreneurial qualities. In this way, family businesses have become an important vehicle for human capital owners to display entrepreneurial information and provide asset mortgages before obtaining financing from external potential investors. In addition, the business risks of enterprises in their early stage are undoubtedly very high. Commercial banks are generally unwilling to provide financing to such enterprises out of consideration of their own benefits and risks. In this way, family businesses have to use the family's trust network to solve financing problems in their early stages or when they are small.

Looking at the growth history of large companies in the world, they were almost all gradually developed from family businesses started by entrepreneurial families, such as Ford, DuPont, etc. Some of these companies are still favored by members of the entrepreneurial families. control or influence. Therefore, the family business system can be regarded to a large extent as a stage that enterprises in the entrepreneurial stage in my country and even the world cannot overcome.

The needs of an immature factor market

A mature market not only requires a developed social economy as its foundation, but also requires a corresponding legal system to regulate people's property rights relationships in market transactions. . Developed countries have clearly defined corporate behavior and rights relationships in the trading market through company laws, contract laws, etc., and have strict public disclosure systems for listed companies in particular. There are many investors in their capital markets, and investors can Buy and sell stocks based on objective analysis of the company's operating performance and operator behavior by independent securities companies and auditing institutions in the market.

In my country, the capital market, manager market and other factor markets are very low-developed. There is a lack of specific records for managers, and it is difficult to make accurate evaluations of managers. This makes it difficult for companies to hire suitable operators from the manager market. Since the market cannot effectively restrict the behavior of operators, if non-family members serve as managers of the company, the agency costs and risks will inevitably be very high. In this way, family companies will not easily hand over management rights. To sum up, when the market development is low, family businesses still have advantages that are difficult to replace in my country.

The social structure of low trust and the needs of our traditional culture

In the social system structure of the East and the West, the status and role of the family system are very different. As Fei Xiaotong discussed in the article "Chaixu Pattern", Western society has a social structure of group pattern. In this kind of society, the existence of groups is first assumed, and individual independence and equality are emphasized. It is an individualistic social structure. The concept and meaning of family are relatively simple, with reproduction as the main function, and it is temporary. In our country's traditional culture, family and family interests and reputation are far higher than other organizations. Our country's traditional society is structured in a differentiated order. The closeness and distance between people are formed by self-centered concentric circles. The social relationships formed with others are like ripples of water, which are pushed out in circles. The thinner it is, the further it gets pushed further and further away. The concept of home in this social structure is extremely flexible and can be expanded outward along the differences as needed.

Therefore, the family in the traditional sense of our country is a clan in structure. It is not limited to the reproductive function, but a business organization. It is precisely because the center of our country's traditional ethics is the self in "respecting oneself and others". The relationships between people are centered on oneself, and all relationships are one's own relationships. Therefore, social trust among people is also measured by familialism, resulting in high trust within the family and low trust in outsiders.

Fukuyama, a Japanese-American scholar, believes that the development of enterprises depends on three types of capital: physical capital, human capital and social capital, among which the influence of social capital exceeds the first two types of capital. The so-called social capital, according to Coleman, refers to the ability of people in an organization to trust each other and cooperate with each other for the same purpose.

Usually the emergence and transmission of social trust mainly occurs through the gradual evolution of cultural mechanisms, such as religion, customs, and ethnic values. In Western society, Christianity is people's unified body of faith, and the maturity of laws, regulations, and market development has formed a complete contract system, thus forming a high level of general trust. In our country, due to the influence of the traditional family system and family culture, extraordinary trust based on family relationships has been formed, resulting in a high level of trust in family members and a general distrust of ordinary people. This kind of trust has led to an inherent deficiency in social capital, which is crucial to the growth of our country's enterprises, forcing private enterprises to rely mainly on family members in the process of starting a business.

The need to save transaction costs

Coase first proposed the concept of transaction costs in 1937 to explain the existence and boundaries of enterprises. He believes that there are transaction costs in using the market to coordinate and allocate resources, and that enterprises, as another mechanism for coordinating and allocating resources, can save transaction costs. However, as the enterprise expands, its organizational governance expenses increase. The growth boundary and efficiency of the enterprise depend on the comparison of total expenses. When the cost of organizing a transaction within the enterprise is equal to the cost of completing the same transaction through the open market, the enterprise reaches boundary. The explanation from institutional economics is: when a family business can save the total cost of the business compared to other types of business organizations, the family business is efficient, otherwise it is inefficient.