In reality, the entrepreneurs of the enterprise first choose the family system is not a serious comparison of a variety of different system performance differences in the choice of the results, but their entrepreneurship had to make the system choice.
The need to broaden financing channels
The investment activity of capital owners in enterprises is essentially a transaction activity between physical capital owners and human capital owners on the right to use factors. Since the quality of human capital is difficult to observe and quantify, before investing, physical capital owners, in order to avoid the transaction risk under the information asymmetry, often require entrepreneurs to provide sufficient asset collateral and a good business record sufficient to confirm their entrepreneurial quality. In this way, the family business becomes an important vehicle for human capital owners to display entrepreneurial information and provide asset collateral before obtaining financing from potential external investors. In addition, there is no doubt that business risks are high during the start-up period, and commercial banks are generally reluctant to provide financing to such firms out of concern for their own effectiveness and risk. In this way, family enterprises have to utilize the family's trust network to solve the financing problem during the start-up period or when the scale is small.
Looking at the history of the growth of the world's large enterprises, they are almost all by the entrepreneurial family opened up the family business gradually developed, such as Ford, DuPont, etc., some of which are still under the control or influence of the members of the entrepreneurial family. Therefore, the family business system can be seen to a large extent as a stage that cannot be crossed by the entrepreneurial stage enterprises in China and even in the world.
Need of immature factor market
A mature market not only needs a developed social economy as its foundation, but also requires a corresponding legal system to regulate people's property right relations in market transactions. Developed countries through the company law, contract law, etc. on the behavior of the company and the trading market in the rights of the relationship has been clearly defined, especially for listed companies have a strict publicity system, there are a large number of investors in their capital market, investors can be based on the market, independent securities companies, auditing institutions on the company's business performance and the conduct of the operator of the objective analysis of the purchase and sale of shares.
In our country, the capital market, manager market and other factor market development is very low, the lack of specific records for managers, it is also difficult to make accurate evaluation of managers. This makes it difficult for enterprises to hire suitable operators from the manager market. Since the market can not provide effective constraints on the behavior of the operator, the agency costs and risks of having a non-family member as the manager of the enterprise are bound to be high, so that the family enterprise will not hand over the right to run the business easily. To summarize, in the case of low market development, family business in China still has an irreplaceable advantage.
Low trust in the social structure and the needs of China's traditional culture
In the structure of the social system of the East and the West, the status and role of the family system is very different. As Fei Xiaotong discusses in his article "The Pattern of Differential Order", Western society is a social structure of group pattern. In this kind of society, the existence of the group is assumed in the first place, the independence and equality of the individual are emphasized, and the social structure is individualistic; the concept and meaning of the family are simpler, with procreation as the main function, and it is temporary in nature. And in our traditional culture, the interests and reputation of the family and clan are far higher than those of other organizations. China's traditional society is a poorly ordered pattern, the proximity of human relationships is centered on the self-centered concentric bundles formed with others to form social relationships like water ripples generally pushed out in a circle, the thinner the push, the further it is pushed away. The concept of home in this social pattern has great scalability, and can be expanded outward along the difference as needed.
Thus, the family in the traditional sense of our country is structurally a clan, which is not only limited to the reproductive function, but is a career organization. It is precisely because the center of our traditional ethics is the self in the "push oneself to others" that all relationships between people are centered on the self, and all relationships are relationships of the self. As a result, social trust among people is also measured by familialism, resulting in a high level of trust within the family and a low level of trust in outsiders.
Japanese-American scholar Fukuyama believes that the development of enterprises depends on three kinds of capital: physical capital, human capital and social capital, in which the influence of social capital exceeds the first two kinds of capital. The so-called social capital, according to Coleman, refers to the ability of people to trust and cooperate with each other for ****same purpose in an organization.
Often social trust emerges and is transmitted mainly through the gradual evolution of cultural mechanisms, such as religion, customs, and values of race. In Western society, Christianity is people's faith***similarity, and the maturity of laws, regulations and market development has formed a perfect contract system, thus forming a higher general trust. And in China, due to the traditional family system, the influence of the family culture formed to family relations based on the extraordinary trust, constitutes the family to a higher level of trust, to the general public generally do not trust. This trust leads to an inherent lack of social capital, which is important for the growth of enterprises in China, forcing private enterprises to rely mainly on family members in the entrepreneurial process.
The need to economize on transaction costs
Coase first introduced the concept of transaction costs in 1937 to explain the existence of businesses and their boundaries. He argued that there are transaction costs associated with the use of markets to coordinate and allocate resources, and that the firm as an alternative mechanism for coordinating and allocating resources can save transaction costs. However, as the enterprise expands, the organizational and governance costs of the enterprise increase, and the growth boundary and efficiency of the enterprise depends on the comparison of the total costs, and the enterprise reaches the boundary when the cost of organizing a transaction within the enterprise is equal to the cost of completing the same transaction through the open market. Explained in terms of institutional economics is: when the family business is able to save the total costs of the business relative to other types of business organizations, the family business is efficient, otherwise it is inefficient.