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Commentary: "are we family and are we treated as family? Nonfamily employees' perceptions of justice in the family firm": it all depends on perceptions of family, fairness, equity, and justice.

Introduction

"Are we family and are we treated as family ..." has addressed an understudied yet important aspect of family-owned and managed firms: the management of the nonfamily human resources. It addresses the perceptions of fairness, equity, and justice within family firms and has proposed distinctly different outcomes when applied to nonfamily individuals working in a family-owned and managed firm. As noted by Chrisman, Chua, and Litz (2003) and Chua, Chrisman, and Sharma (2003), attracting qualified nonfamily employees and fostering value-creating behaviors in this group is critical (but that is true for all firms). What the authors have not noted is that issues of fairness, equity, and justice go to the heart of family conflict over succession and inheritance, and ultimately to the very survival of the firm (Chua et al., 2003). Thus, injustice, unfairness, and inequalities can jeopardize the family firm as an employment opportunity for both family and nonfamily.

Social Systems and Reference Groups

While the theoretical approach laid out in "Are we family ..." seems straightforward, actually applying this to empirical research could become problematic given the differential effects of these variables within the various social systems involved (Greenhaus & Powell, 2006; White & Klein, 2002). For example, perceptions as to what is fair, equitable, or just for a nonfamily member should apply only within the social-task system of the workplace as this is where nonfamily members function. For a family member working in their firm, these concepts apply to two different systems, the workplace and the family. This is where the view of "Are we treated as family ..." becomes interesting. Who constitutes the reference family for the nonfamily employee? The implicit assumption is that the reference group is the family of owners. Do employees want to be treated as they perceive the family of the ownership are treated, or do they want to be treated as they perceive their own family system would treat them? Thus, a confounding problem is the specific reference system for nonfamily employees impacting their perceptions of being treated like family. What looks like a simple research model quickly becomes complex.

While fairness, justice, and equality are related, they are different concepts with different components and factors influencing them. They may be perceived differently depending on the social sphere to which they are applied. Are these concepts the same across both social system spheres of family and workplace? How do they enhance or inhibit each other (Greenhaus & Powell, 2006) with respect to job performance? For example, a nonfamily employee only has to optimize the fairness outcome in one sphere while a family member in a family firm is faced with optimal fairness outcomes in two social systems that may be in some conflict with each other at different times. That is, what may seem unfair in the workplace might actually be seen as fair and just within the family sphere. Likewise, what might be seen as equitable (equal salaries) might be also perceived as unfair (one person produces more than another) regardless if the employee is family or not.

Family as an Explanatory Variable

To explain this potential conflict in the perception of justice, equity, and fairness between these two systems (family and workplace), the authors have adopted the concept family influence (Habbershon, Williams, & MacMillan, 2003) and provide both convincing theoretical basis and existing research evidence for why this would be a curvilinear process, at least with respect to nonfamily employees. While such an approach clearly has its merits, it still suffers from the attempt to turn essentially a potentially loosely defined demographic variable (family) into a causal factor. Inherent in every definition of family business is both a definition of family as well as of the firm. Is family really a unitary concept, or is it in fact a multifaceted term that serves as a quick reference for a variety of factors such as generations, values, ethnicity, culture, etc.? In other words, when one uses the term family, one is subsuming a number of factors within that term. Is the impact of family or family influence due to values, cultural background, organizational structure, the number of family members in the firm, or number of generations involved? To advance the field, one needs to add some precision to the definition of family influence and family, which are most likely multidimensional variables for purposes of most research studies.

Problems Defining Family

Families are made up of people who have a shared history, experience, some degree of emotional bonding, sets of common goals for the future, and whose activities involve group issues as well as individual concerns. Families can take many different forms. The intact nuclear family is the most familiar although not the most common anymore in the developed world. Today, dual families have become the norm, and what is family is not as simple as it seems (Bengtson, Acock, Allen, Dilworth-Anderson, & Klein, 2005; Boss, Doherty, LaRossa, Schumm, & Steinmetz, 1993; White & Klein, 2002). Many are reconstituted families with one of the parents widowed or more likely divorced. Such families consist of a new spouse and children from one or both prior unions. The family social system now includes the relatives of both current and ex-spouses as well as parents, in-laws, children's spouses and children, aunts, uncles, and cousins. This may be far more complex than the traditional "cousin consortium." What mediates this complexity in the family social system are degrees of cohesion, adaptability, flexibility, boundaries, shared values, and goals. These may be more useful concepts than simply using family and are also more easily tested. Astrachan, Klein, and Smyrnios (2002), with their proposed scale of family influence, attempt to address this issue. Addressing family influence also means addressing cases in which nonbiological family are both perceived and treated as family, abeit an extended one. Thus, to identify family and measure its impact in any given family firm becomes both difficult and critical if we are going to use this variable to predict problems within family firms and not merely use the term family as a post hoc explanation of observed human resource problems.

It is true that securing nonfamily employees' commitment and cooperation is more difficult when they do not believe that the family business supports them and that they are not full-fledged and valued members of the family business. But are these individuals concerned about being members of the firm (one social system) or about not being treated the same as the family of owners (a different social system)? Family members can also feel that they are not valued (or are taken for granted) and may believe that they also are not full-fledged members of the firm and/or family because of conflicts in how justice is perceived within the two different social sytems or spheres. Family employees may perceive injustice, inequality, or unfairness in human resource decisions even more than nonfamily employees because of the intersect of the two social systems. What might drive justice in the family firm is not family or the intensity of the family influence but the actual values held by the family leadership concerning people in general, employees, and family in particular. What impacts the perceptions of injustice by nonfamily employees may be their ability to distinguish between decisions in the workplace social system and those in the family social system (Greenhaus & Powell, 2006).

When the authors talk about the family who exhibits excessive family influence, one would assume that they are talking about a biological grouping. This also assumes that families are bound together very differently than nonbiologically related employees to the firm. While this may be true in some cases, it is important to remember that what makes up family is not so clear (White & Klein, 2002). For example, in-laws are legally and emotionally related, but not a direct biological relationship. Distant cousins, while biologically related, may not feel emotionally tied to the larger family unit or its firm except by their ownership stake in the firm. The boundaries of who are and who are not in the family are issues that family business researchers have yet to adequately address. By looking at existing concepts with the sociological literature on families, one might better understand what is meant by family and family influence. We need to understand what variables within the concept of family are critical to the perceptions of justice, fairness, and equity in the family firm (Bengtson et al., 2005; White & Klein, 2002).

Operational Definitions

The need for various operational definitions of family firms (which might minimize confounding in individual studies) is easier than a universal definition. Most importantly, by moving to more operational definitions, there may be a realization that there is no such thing as a typical family firm. For example, Carsrud, Perez, and Sachs (1996) proposed a taxonomy based on meaningful differences between various types of family firms. Their taxonomy offers an example of how the concept of family firms can actually be influenced by three factors: (1) sources of bonding (biological, emotional, or legal); (2) strength of shared values; and (3) degree of governance and control. As such provides a model for how to build a multidimensional view of famiLy and may better determine what dimensions impact perceptions of justice, fairness, and equity. A family that is held as a cousin consortium is very different from one of siblings who are not only bonded by biology but also potentially by shared values and family experiences.

Taking this argument further, the impacts of family influence on perceptions of justice may be mediated by the concentration of ownership and governance (founder versus cousin consortium). The family influence variable attempts to reflect the degree that the family social system impacts, positively or negatively, value-creating attitudes and behaviors by those in family firms and the type of perceptions of justice, equity, and fairness exhibited by employees. The important question is what drives this curvilinear process within the family portion of this concept. While the concept of family influence may be useful, cultural differences between family and nonfamily employees may also mediate such perceptions of degree or valence of family influence. This is clearly a confounding factor.

For example, employees from a traditional Catholic Cuban-American background may perceive and react to family influence differently from those of a family of owners from another ethnic and religious background. Values are clearly part of family and family influence. It is possible that certain family values rather than excessive family influence are having a negative impact on employees. Another way that shared family values positively or negatively impact family is the degree of shared values. Families may share, or not share, the same values across generations. Nonfamily may hold a common value system with the family that can enhance or negate the degree of family influence within the family firm.

Different goals may exist for nonfamily businesses and family-owned businesses. Terminologies such as "family-first businesses" and "business-first (family) businesses" accent the fact that there are often conflicting goals within the family-owned business. These may be the source of perceived injustice within the family firm for family and nonfamily employees. If the family does not communicate clearly the goals and boundaries between the family sphere and the workplace sphere (Greenhaus & Powell, 2006), the perceptions of an injustice might be the result even when no such intention was meant by the family leadership.

Variables that may affect the perception of justice and the degree of family influence in a family firm are adaptability and cohesion. Both are recognized as important elements for the health and functioning of families, of families in businesses, and in differences between families. Perez (2001) found that a greater family adaptability lead family firms to open up to employment of nonfamily members. Adaptability could be a dimension of family influence. If so, do these variables impact the productivity of employees by improving the sense of fairness in the firm? Does family adaptability have a relation with organizational adaptability and, therefore, on perceptions of organizational justice?

Justice and Job Performance

The authors have adopted the view that organizational justice impacts identity with a firm and job performance. They imply that it is the perception of how nonfamily employees perceive justice, equity, and fairness that creates unique human resource management problems. But is this the really unique management problem? One of the issues that the article does not address but is a natural outgrowth is, do family members in a firm perceive injustice or lack of fairness differently from those who are nonfamily employees? If so, why? It would seem that the management of family members in a business is far more difficult than nonfamily. This is because the identification of employees with more than one social system in the family firm may be a key to conflicts in the perceptions of justice, fairness, and equality. How do you fire family? In other words, perceptions of justice depend on "whose shoes you are in or think you are in." The social sphere or system (workplace or family) that is being impacted will elicit different responses in different people. Individuals perceive an injustice as a negative event that is usually attributed to an external cause. An easy target for such an attribution by nonfamily employees is the family in the family firm. Who does the family member of a family firm attribute the injustice to remains a critical question that the authors have left unaddressed.

Difficulty of Turning Theory into Empirical Research

The family business literature is laced with the dichotomies of family- versus nonfamily-owned firm or public versus private firm. Reality is different. Some evidence indicates that as much as 60% of the top 5,000 publicly traded firms in the United States are in fact controlled by top management through significant stock holdings (Bristow, 2000). Many of these firms could be considered family or closely held businesses. That being the case, just how does one empirically test hypotheses concerning the degree of family on perceptions of justice? Can one use public firms as a control group, or does this, too, have a potential confounding? What limits empirical study of perceptions of justice, equality, and fairness is not the obvious hypotheses that the authors have provided from their excellent theoretical overview, but in actually devising a way to test these hypotheses within a family firm that accepts the complexity in defining the family portion of this economic unit.

REFERENCES

Astrachan, J.H., Klein, S.B., & Smyrnios, K.X. (2002). The F-Pec scale of family influence: A proposal for solving the family business definition problem. Family Business Review, 15(1), 45-58.

Bengtson, V.L., Acock, A.C., Allen, K.C., Dilworth-Anderson, P., & Klein, D.M. (2005). Sourcebook of family theory and research. Thousand Oaks, CA: Sage Publications.

Boss, P.G., Doherty, W.J., LaRossa, R., Schumm, W.R., & Steinmetz, S.K. (1993). Sourcebook of family theories and methods: A contextual approach. New York: Springer Science Business Media.

Bristow, D.K. (2000). Composition of U.S. stock exchanges firms. Unpublished study of the Directors Institute, Los Angeles, UCLA.

Carsrud, A., Perez, S.E., & Sachs, R. (1996). Exploring a classification scheme for closely-held businesses: Getting to workable definitions of family firms. Proceedings of the World Conference of the Family Business Network, Lausanne, Switzerland.

Chrisman, J.J., Chua, J.H., & Litz, R. (2003). A unified systems perspective of family firm performance: An extension and integration. Journal of Business Venturing, 18(4), 467-472.

Chua, J.H., Chrisman, J.J., & Shanna, P. (2003). Succession and nonsuccession concerns of family firms and agency relationship with nonfamily managers. Family Business Review, 16, 89-107.

Greenhaus, J.H. & Powell, G.N. (2006). When work and family are allies: A theory of work-family enrichment. Academy of Management Review, 31(1), 72-92.

Habbershon, T.G., Williams, M., & MacMillan, I.C. (2003). A unified systems perspective of family firm performance. Journal of Business Venturing, 18, 451-465.

Perez, S.E. (2001). Strategic management in family firms in Mexico: A comparative study. Unpublished dissertation in Management, EGADE, Monterrey Institute of Technology, Mexico.

White, J.M. & Klein, D.M. (2002). Family theories: An introduction (understanding families). Thousand Oaks, CA: Sage Publications.

Please send to correspondence to: Alan L. Carsrud, Ph.D., tel.: (305) 348-7156; e-mail: alan.carsrud@fiu.edu.

Alan L. Carsrud, Ph.D. is Executive Director of the Pino Center at Florida International University (FIU). He is also Professor of Industrial and Systems Engineering, Clinical Professor of Management, and Professor of Hospitality Management at FIU, where he is Senior Researcher in the Center's Institute for Family Business.
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Author:Carsrud, Alan L.
Publication:Entrepreneurship: Theory and Practice
Geographic Code:1USA
Date:Nov 1, 2006
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