Using corporate governance and accountability to manage performance in an ambitious entrepreneurial firm: fieldwork evidence from a Chinese start-up

This paper aims to explore to what extent western views of good corporate governance are relevant in a new small firm in an emerging economy. Rather than taking the 'large corporate' standpoint, this study has moved on from the boardrooms of large corporates to internally focused corporate governance and accountability within businesses which are owned and controlled by insiders. Using an observation journal and interview transcripts from a period of participant-observation in a Chinese entrepreneurial start-up, it investigates how flows of information can enhance accountability and inform strategic decision-making in a single owner-manager controlled firm.
Our study adopts an informational framework to which has four aspects: controlling the environment; assessing the risk; utilising information; and combining effectively communication, monitoring and control activities. In addition to the standard 'hard' accounting information, it further explores the use of 'soft' information, such as tone and facial expressions, in communicating messages to employees who are carrying out tasks and reporting to superiors. Such social signaling can increase the difficulty of achieving monitoring and control targets, as employees can devise social counter-strategies, or even cover-up issues to protect solely their own interests, rather than promoting the interests of the owner-manager or the whole firm.