Ownership Structure of Chinese SME's and the Challenges it Presents to Their Growth

We present a study of ownership and governance structure in the growing Chinese entrepreneurial SMEs sector. The study examines the structures that are embedded in the traditional Chinese values and culture, as well as the institutional environment for Chines SME's and the limitation they present towards the growth SMEs in China. Our findings suggest that Chinese SME ownership, and ownership transition appears to be stable and supportive of SME growth. The external institutional environment, however, is a limiting factor for the growth of Chinese SME. This results in the structure of dominant shareholder that seems to be a suitable construct for most SMEs under the current institutional environment of China. The first phase Chinese SME's go through is to define unequivocally the role and the responsibility in the organization of family members. We conclude this paper with the implications and suggestions for future research.