In regards to the distinctive exclusivism of the family firm governance structure in China,the reactions of academic circles differ greatly from criticism to praise. However,whether they agree or disagree,it is generally accepted that the imperfect market environment and legal environment makes it difficult for family firms to give up their closed governance structures. But this viewpoint cannot satisfactorily explain why there are also a large number of family firms with closed governance structures in developed market economies,where the external environment is more favorable than inside China. Furthermore,differences in external environment also exist in different regions in China(for example,economically developed regions and underdeveloped regions have obvious legal system conception differences).Therefore,this viewpoint also does not answer why the exclusivism of family firms is still comparatively widespread in situations with different external environments. Additionally,it does not account for why,in similar situations,some family firms become modern companies.Our research has found that the effect of the external environment on governance structures of family firms is not substantial. The reason for changes in the governance structures of leading family firms lies in their individual needs for development. When their needs for outside resources becomes so strong that their enterprises will face crisis if they don’t absorb such resources,they will release control and begin to transform into modern enterprises.
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