An evolutionary game analysis of the Credibility of Chinese family professional managers

Abstract

With the promotion of the status of human capital, the cooperation between Chinese family enterprises and professional managers are becoming more and more important. However, there are problems such as information asymmetry, interest inconsistency, and imbalance between family enterprises and professional managers. In turn, these issues lead to moral hazards in partnerships. In this context, this paper uses the evolutionary game method to study whether professional managers and family enterprises operate in good faith and whether they supervise. The results show that compensation incentives and compensation for breach of trust are beneficial to reduce the dishonest management behavior of professional managers. However, in the long run, professional managers often choose to operate in bad faith to get extra profits. Because of this problem, family enterprises and professional managers need to formulate more effective measures to regulate.