The practice and effects of control mechanisms in Chinese family business

摘要

Family business researchers and practitioners have long been confused about the way of governing family managers in family firms, especially those under the influence of Chinese family culture. Agency theorists assume a self-interested nature of family managers and suggest imposing control mechanisms on them to improve performance. Stewardship theorists, however, believe a self-actualizing nature of family managers and argue against the use of control mechanisms. Based on a sample of 186 family businesses in China, this study investigates their ways of controlling family managers, and the effects of control mechanisms on firms' performance. Our results indicate that family business owners in China adopt a series of control mechanisms on their family managers, and obtain higher performance by doing so. The findings empirically validate the assumptions of agency theory in the context of Chinese family business, thus suggesting the existence of agency relationship between Chinese family business owners and their family managers.