This week, our choice of articles lets you dig deeper into the ethics in family firms.
Family firms’ CSR: A calculated quest for socioemotional wealth
This study investigates the engagement of family firms in corporate social responsibility. Authors Réal Labelle and team first compare their corporate social performance (CSP) to non-family firms. Then, following recent evidence on the heterogeneity of family firms, the researchers examine two factors that may influence CSP within family firms: the level of family control and the governance orientation of the country in which they operate.
This research is based on a theoretical framework which considers both agency and socioemotional wealth (SEW) influences on family firms CSR engagements. Overall findings are that family firms exhibit lower CSP than non-family firms. But when focusing on family firms, the analyses show a curvilinear relationship between family control and CSP. At lower levels of control, family owners invest more in social initiatives to protect their SEW.
Beyond a threshold level of control that the authors estimate at 36 % in their sample, economic considerations prevail over SEW and social performance starts decreasing. The paper also finds that family firms operating in stakeholder-oriented countries are more attentive to social concerns than those operating in more shareholder-oriented countries.
Réal Labelle, Taïeb Hafsi, Claude Francoeur and Walid Ben Amar. 2018. Family Firms’ Corporate Social Performance: A Calculated Quest for Socioemotional Wealth.
Journal of Business Ethics, 148(3), 511–525.
Is nepotism so bad for family firms?
This paper focuses on the issue of nepotism or the practice of hiring and managing family members in family firms. Extant research suggests that while nepotism is related to numerous problems, it also offers some unique advantages to family owned firms.
The authors use a socioemotional wealth (SEW) perspective to develop a theoretical framework that explains how nepotism influences firm performance. In doing so, they rely upon a nuanced conceptualisation of SEW to clarify why some family firms are more likely to engage in nepotism than others, as well as explain the contingencies under which nepotism may prove beneficial or detrimental for family firms.
Finally, the paper explores how human resource practices might impact the interplay between nepotism, environmental contingencies, and firm performance.
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Shainaz Firfiray, Cristina Cruz, Ionela Neacsu and Luis R. Gomez-Mejia. 2018. Is nepotism so bad for family firms? A socioemotional wealth approach.
Human Resource Management Review, 28(1), 83-97.
Religious belief, corporate philanthropy, and political involvement of entrepreneurs in Chinese family firms
This study examines whether religious belief influences an entrepreneur’s political involvement and further explores the moderating role of corporate philanthropy. Using the data from the 2008 national survey of Chinese family firms, this study provides strong evidence to show that the likelihood of political involvement is significantly higher for entrepreneurs with religious beliefs than for their counterparts, suggesting that religious entrepreneurs in Chinese family firms are more likely to participate in political affairs.
This finding echoes the view that religious believers acquire civic skills through their associational memberships or experience in involving religious activities. In addition, corporate philanthropy attenuates the positive association between religious belief and political involvement.
The above findings are robust to a variety of sensitivity tests and are still valid after controlling for the potential endogeneity between political involvement and religious belief.
Du, X. 2017. Religious Belief, Corporate Philanthropy, and Political Involvement of Entrepreneurs in Chinese Family Firms.
Journal of Business Ethics, 142(2), 385–406.
Gender and family business participation in community social responsibility
Small family businesses have generally been shown to exhibit significant concern for social responsibility, especially at the community level. Despite the reported heterogeneity of family firms in their preferences for and participation in social responsibility, the drivers of such differences are not agreed upon in the literature.
The authors draw from enlightened self-interest and social capital theories by exploring their complementary and competing implications for the effect of duration and community satisfaction on participation in community-oriented social responsibility (CSR).
Additionally, drawing on the association between gender and self-construal and evidence that gender shapes helping and giving behaviours, these authors assess the moderating role of the gender of the firm manager in these relationships.
The researchers test their hypotheses on a sample of 279 family businesses and find support that gender moderates the relationship between community duration and satisfaction and measures of CSR.
Peake, W.O., Cooper, D., Fitzgerald, M.A. et al. 2017. Family Business Participation in Community Social Responsibility: The Moderating Effect of Gender.
Journal of Business Ethics, 142(2), 325–343.
Socioemotional wealth and CSR
This theoretical paper is offered in the spirit of advancing the debate on the socioemotional wealth (SEW) construct and its impact on how family firms conceptualise and practise corporate social responsibility (CSR).
The study builds on Kellermanns et al.’s (Entrep Theory Pract 36(6):1175–1182, 2012) claim that the SEW dimensions can be positively and negatively valenced as well as makes a distinction between the selective and instrumental approach to CSR and the holistic and normative one. Drawing on these considerations, it provides a theoretical underpinning in favour of the view that SEW has ambivalent nature and therefore can produce detrimental outcomes for stakeholders of family companies.
In this way, the study challenges the implicit assumption prevalent in the literature that SEW is “a prosocial and positive stimulus”. Crucially, it expands on the SEW construct by arguing that, given its ambivalent nature, SEW, as such, is at odds with the “strategic, whole-business view of responsibility”.
Consequently, it posits that family firms—because of their concern with SEW—may be more likely to adopt the instrumental and selective rather than strategic (holistic) and normative approach. Hence, it also makes the case for regarding the latter as a reference point to investigate the family company’s attitude towards social responsibility. It concludes by summarising the argument and offering future research avenues.
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Piotr Zientara. (2017). Socioemotional Wealth and Corporate Social Responsibility: A Critical Analysis.
Journal of Business Ethics, 144(1), 185–199.
Image and reputation of family firms
The special characteristics of family firms, such as the owning family’s involvement and control or its strong identification with the business, make creating and preserving a good reputation desirable.
Recent studies confirm the positive influence of a firm’s reputation on organisational success and non-financial goals, such as customer retention and social capital. The image and reputation of family firms have been the subject of numerous studies. Despite increasing research intensity, a comprehensive overview of this topic is still lacking.
This work provides an inventory of and structure for extant research on the image and reputation of family firms. To this end, a systematic literature analysis has been performed, which includes 73 papers from scientific journals from various business fields. Image and reputation are discussed in different theoretical and geographical contexts.
Moreover, this contribution summarises the ways in which the public perceives family firms and existing influencing factors, courses of action and impacts; in a subsequent step, this work integrates these findings into a model that can serve as starting point for future research activities.
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Martina Sageder, Christine Mitter and Birgit Feldbauer‐Durstmüller. 2018. Image and reputation of family firms: a systematic literature review of the state of research.
Review of Managerial Science, 12(1), 335–37.
Labour conflicts in French workplaces: Does (the type of) family control matter?
This paper investigates the influence of family control on the quality of labour relations. Using French workplace-level data, authors Belot and Waxin find that family firms experience less frequent and less intense labour conflicts.
Moreover, family involvement tends to offset the negative effect of labour disputes on corporate performance. The authors examine whether specific family patterns are conducive to better labour relations. The writers distinguish active from passive family control, eponymous from non-eponymous family businesses, and break down family firms into founder-controlled and descendant-controlled companies.
It appears that the benefits of family control are not attributable to a given type of family firm. These findings suggest that peaceful labour relationships are a peculiar attribute that families generally bring to corporations and extend understanding of the “family effect” on organisational performance.
François Belot and Timothée Waxin. 2017. Labor Conflicts in French Workplaces: Does (the Type of) Family Control Matter?
Journal of Business Ethics, 146(3), 591–617.