Advantages: In a family business, the ownership and control rights of family members are combined into one. Family members participate in both business management and the distribution of residual claims. Therefore, family members in a family business have the motivation to run the business well, which makes

The likelihood of facing adverse selection and moral hazard is greatly reduced.

At the same time, family members in family businesses form a small group. Since the group often communicates together, the information asymmetry of internal members and the coordination costs among members are greatly reduced.

Not only that, due to the maintenance of blood relationships, family members have a high sense of identity and unity with the family, which makes them have a sacred responsibility for the family. This makes family members work for the family business "each does his or her best, and each one does his or her best."

"Get what you need", regardless of whether the labor you pay and the remuneration you receive are in a reasonable proportion, thus greatly reducing transaction costs among enterprise members.

In addition, there is a selective stimulation system within the family group, that is, family members must work hard for the development of the family. If a member shows moral hazard and adverse selection, he may be expelled from the clan by the clan leader.

Under this kind of pressure, family members in family businesses generally become more conscious and work hard for the development of the family business and the family.

Defects: Three major disadvantages of family-owned enterprises. There are many characteristics in contemporary China's social and economic environment that are suitable for family businesses to survive. Therefore, after nearly 20 years of rapid development, the use of family-based methods to manage enterprises has become 70%-80% of private enterprises.

The common management model of enterprises.

From an international perspective, even in countries with developed market economies, family businesses are the most common form of business, and many world-famous large companies still have a family flavor.

However, as the market economy system gradually develops and the economy becomes increasingly globalized, pure family businesses only have limited room for survival and growth in some industries and within a certain scope, and cannot become the real protagonists in market competition.

When the market changes faster and faster and competition becomes more and more fierce, the disadvantages of closed family management controlled entirely by family members become apparent.

Disadvantages 1. Organizational Mechanism Obstacles As family businesses grow, various interest groups will form within them. Due to the complex emotional relationships, leaders will be in a more complex and even dilemma when dealing with interest relationships.

When relatives and family members of corporate leaders violate the system, it is difficult for managers to treat them equally as ordinary employees, which leaves hidden dangers for the internal management of the company.

Another very common characteristic of family businesses is that they can share hardships but not joys. In the early stages of starting a business, all conflicts are covered up by the passion for starting a business. However, after starting a business, the three hurdles are: dividing gold and silver, discussing honor and disgrace.

Seating arrangements often hinder the healthy growth of organizations.

When there are differences in views on honor, money and power, antagonism may occur between brothers and between father and son.

Disadvantage 2: Human resource limitations Family businesses seem to have a repulsive effect on external resources and vitality.

Especially in family-owned enterprises, it is difficult for outsiders to enjoy equity rights. Their mentality is always just that of a part-time worker, and it is always difficult to integrate into the organization.

In addition, due to the difficulty in absorbing external talents, the company's higher-level development will be restricted.

As Liu Yongxing, President of New Hope Group, said: "The biggest drawback of family businesses is that social elites cannot get in. Several brothers are at the top of the company, and talented people from outside cannot get in, and the family's way of thinking is somewhat similar.

, there is no breakthrough point. Everyone has their own ideas, and it is difficult to make a decision on something, which can easily delay business opportunities. "Disadvantage 3: Unscientific decision-making procedures lead to arbitrary decisions, which are an important guarantee for the early success of many private enterprises.

, many entrepreneurs rely on courage and judgment in their growth process, and they succeed because they seize one or two fleeting opportunities.

However, as the enterprise develops and the external environment changes, the personal experience of the business owner begins to fail. The business grows bigger and bigger, and the risk of investment becomes larger and larger. Unlike in the early days of starting a business, the losses of one or two mistakes can be compensated.

return.

At this time, it becomes increasingly important to ensure the democratic and scientific nature of decision-making.

Solution: 1. Separate ownership and operators.

With the expansion of enterprise scale, intensification of enterprise competition, changes in family and family concepts, and the rise of the managerial class, family-based operations have difficulty adapting to the development of post-industrial society and have withdrawn from the stage of history.

Those families with larger shares can only indirectly influence the company's decision-making, and the management rights of the company fall into the hands of management experts. The separation of the two rights of the company fundamentally shakes the foundation of family management.

2. If a family business wants to survive and grow in the ever-changing market environment, it will eventually evolve into a public company. This is not determined by the personal will of the entrepreneur or his successors.

3. The introduction of professional managers is an important means to break through the talent bottleneck of family businesses, and is also an inevitable requirement for improving the corporate governance structure.

4. Family members cannot work in the company unless they are as capable as any non-family member employee.