Managing Family Members: How Monitoring and Collaboration Affect Extra‐Role Behavior in Family Firms

• Author: Franz W. Kellermanns,Kimberly A. Eddleston,Roland E. Kidwell
• Published date: 01 September 2018
• DOI: http://doi.org/10.1002/hrm.21825
• Date: 01 September 2018

Human Resource Management, September–October 2018, Vol. 57, No. 5. Pp. 957–977

© 2017 Wiley Periodicals, Inc.

Published online in Wiley Online Library (wileyonlinelibrary.com).

DOI:10.1002/hrm.21825

Correspondence to: Kimberly A. Eddleston, D’Amore-McKim School of Business, Northeastern University, 209

Hayden Hall, Boston, MA 02115-500 0, Phone: 617-373-4014, Fax: 617-373-8628, E-mail: k.eddleston@neu.edu

MANAGING FAMILY MEMBERS:

HOW MONITORING AND

COLLABORATION AFFECT EXTRA-

ROLE BEHAVIOR IN FAMILY FIRMS

KIMBERLY A. EDDLESTON, FRANZ W. KELLERMANNS,

AND ROLAND E. KIDWELL

In a study of family fi rms that included survey responses from both family CEOs

and family member employees, we examined the roles that collaboration and

CEO monitoring play regarding the prevalence of extra-role behavior, an impor-

tant human resource outcome that can impact job performance and fi rm perfor-

mance. Results indicated that an integration of stewardship and agency theories

(manifested through interactions between family harmony and adaptability with

monitoring) helps explain the level of extra-role behavior displayed by fam-

ily employees. The fi ndings lend some support for the argument that effective

human resource practices in family fi rms should be balanced between instru-

mental governance mechanisms that refl ect a monitoring approach and norma-

tive mechanisms that focus on collaborative efforts among family employees.

When this balance is achieved, an environment of fairness and accountability

rather than a tone of distrust and forced compliance may prevail in family fi rms,

thus addressing a key human resource issue in this hybrid form of organization.

© 2017 Wiley Periodicals, Inc.

Keywords: agency theory, corporate governance, entrepreneurial/small

business, organizational citizenship behavior, employee relations

Grounded in a mixed ancestry of family

and business, the family firm is perhaps

the most commonly studied type of

hybrid identity organization (Whetten,

Foreman, & Dyer, 2014). Although its

hybrid identity can create unique strengths,

the family firm can also create unique human

resource challenges because its family and busi-

ness identities are not necessarily compatible

(Sundaramurthy & Kreiner, 2008). Whereas the

family identity fosters strong commitment and

altruism among family members (Eddleston &

Kellermanns, 2007; Tagiuri & Davis, 1992), it can

also lead to problems associated with nepotism,

the consumption of unearned perks, and moral

hazard when combined with the business identity

(Chrisman, Chua, & Litz, 2004; Madison, Holt,

Kellermanns, & Ranft, 2016; Sundaramurthy &

Kreiner, 2008). Part of the complexity in manag-

ing family employees is due to contrasting norms

that govern the family and business domains. In

a family, individuals are expected to nurture and

958 HUMAN RESOURCE MANAGEMENT, SEPTEMBER–OCTOBER 2018

Human Resource Management DOI: 10.1002/hrm

Rather than debate

the superiority of

stewardship theory

versus agency

theory in managing

family employees,

we suggest that

it is beneficial

to investigate a

balanced approach

that integrates

the advice of both

theories given the

hybrid identity of

family firms.

to asymmetric altruism, family firm leaders are

often overly generous toward family employees,

particularly their adult children, offering them

jobs and promotions regardless of their qualifica-

tions, and refraining from disciplining their poor

performance or dysfunctional behaviors (Dawson,

2011; Eddleston & Kidwell, 2012; Kidwell et al.,

2012; Schulze et al., 2001). As a result, agency

theory stresses how family involvement can cre-

ate significant problems for human resource man-

agement (HRM). Therefore, in managing family

employees, proponents of agency theory tend to

advocate for greater controls and monitoring (Le

Breton-Miller & Miller, 2009; Schulze et al., 2001).

Rather than debate the superiority of steward-

ship theory versus agency theory in managing

family employees, we suggest that it is beneficial to

investigate a balanced approach that integrates the

advice of both theories given the hybrid identity of

family firms. Accordingly, we propose that family

firms emphasizing collaboration as advocated by

stewardship theory and monitoring as advocated

by agency theory may experience higher levels of

extra-role behavior by family employees. Extra-

role behavior (ERB) is defined as discretionary

behavior that is (1) not specified in advance by the

job role, (2) not recognized by a formal reward sys-

tem, and (3) not a source of punishment if the job

holder does not perform it (Van Dyne & LePine,

1998). We focus on predicting ERB because it is

commonly associated with stewardship (Davis,

Schoorman, & Donaldson, 1997; Eddleston &

Kellermanns, 2007) and is a key human resource

linked with job performance (Colquitt, 2008; Van

Dyne & LePine, 1998). ERB is also believed to

reflect effective human resource practices and to

contribute to firm performance (Elorzaa, Aritzetab,

& Ayestaránc, 2011; Gavino,Wayne, & Erdogan,

2012; Organ, 1988). Additionally, because the

norms of the family emphasize altruism and help-

ing those in need (Lubatkin, Ling, & Schulze, 2007;

Van der Heyden et al., 2005), ERB can be seen as

a positive outcome from the family firm’s hybrid

identity because it reflects family employees’ help-

ing behavior in the firm.

Our study contributes to the family business

and human resource management (HRM) litera-

tures in several ways. By extending the hybrid

identity concept to HRM in the family firm, we

recognize the unique challenges family firm lead-

ers face in managing employees who are also fam-

ily members. In so doing, we answer recent calls

(Le Breton-Miller & Miller, 2009; Le Breton-Miller,

Miller, & Lester, 2011; Madison et al., 2016) for

more research addressing a desired equilibrium

between monitoring mechanisms that reflect

a control approach (business results first) and

care for one another regardless of their contri-

butions; in a business, individuals are expected

to contribute to the firm and to earn rewards

(Lansberg, 1983; Van der Heyden, Blondel, &

Carlock, 2005). The recognition of this hybrid

identity and the divergent norms of family and

business have led to two very different views of

family involvement in the firm: one based on

stewardship theory, which stresses the collabora-

tion and reciprocal altruism of family employees,

and the other rooted in agency theory, which

stresses the need to monitor and control family

employees (Davis, Allen, & Hayes, 2010; Kidwell,

Kellermanns, & Eddleston, 2012; Madison et al.,

2016). These opposing views offer very different

advice for how family firm leaders

should manage family employees.

Family firm research drawing

from stewardship theory typically

characterizes family employees as

stewards who significantly contrib-

ute to the family firm (Corbetta

& Salvato, 2004; Eddleston &

Kellermanns, 2007; Eddleston,

Kellermanns, & Zellweger, 2012).

Research in this tradition demon-

strates that family commitment

to the business (Zahra, Hayton,

Neubaum, Dibrell, & Craig, 2008)

and positive family relationships

(Eddleston & Kellermanns, 2007;

Eddleston, Kellermanns, & Sarathy,

2008) contribute to family firm

success. Family members are seen

as intensely dedicated and com-

mitted employees whose shared

family identity motivates them to

pursue firm goals (Sundaramurthy &

Kreiner, 2008) and to continuously

search for new avenues for growth

and firm improvements (Eddleston,

Kellermanns, & Zellweger, 2012;

Miller, Le Breton-Miller, &

Scholnick, 2008; Zahra et al., 2008). In manag-

ing family employees, proponents of stewardship

theory therefore advocate for greater emphasis

on participation, adaptability, and family bonds

(Eddleston & Kellermanns, 2007; Eddleston et al.,

2012; Madison et al., 2016; Zahra et al., 2008).

The stewardship theory view of family

involvement and how best to manage family

employees is in stark contrast to research rooted in

agency theory. Agency theory research highlights

the difficulties family firm leaders encounter in

monitoring and disciplining family employees

(Chrisman, Chua, Kellermanns, & Chang, 2007;

Schulze, Lubatkin, Dino, & Buchholtz, 2001). Due