Midea Company Case Analysis

Corporate governance and transformative change of governance mode in family businesses have fundamentally challenged the internal governance mechanisms in the contemporary business (McConaughy et al., 2008). Some common ideas of thought on governance mechanisms, which based on the question of what governance mechanisms makes the contribution to corporate governance of family firms, have been stimulated. Three common views, ownership structure, incentive mechanisms and restraint mechanisms, on the state of significant mechanisms in corporate governance have been identified in the literature. This paper argue that there is a need to move beyond current attempts to find a deep understanding on the state of internal governance mechanisms and aim to investigate in what ways do internal governance mechanisms …show more content…
Incentive mechanisms, supervision mechanisms, decision-making mechanisms and construction of corporate culture can be understand as a leitmotiv running through the case analysis suggesting that these internal governance mechanisms are helpful in addressing agency relationship in Midea. Holding on to a sense of choosing governance mode is difficult for family firms, considering that passing the firm to family members or experienced professional managers in the succession stage, it is suggested that, because of the existence of agency relationship. Nevertheless, principle-agent relationship become critical to prevailing discourses of corporate governance that question the function of internal governance mechanisms within contemporary businesses (Daly, 2015). What is apparent in the case analysis shown in the paper is that what internal governance mechanisms are sought by Midea in accommodating agency relationship. It can be seen that how the company constantly reforms and improves its internal governance