Research on the human resource practices of family businesses: A domain worthy of further study

• DOI: http://doi.org/10.1002/hrm.21939
• Author: Donald O. Neubaum
• Date: 01 September 2018
• Published date: 01 September 2018

GUEST EDITOR’SINTRODUCTION

Research on the human resource practices of family

businesses: A domain worthy of further study

Donald O. Neubaum

College of Business, Florida Atlantic University

E-mail: dneubaum@fau.edu

It is with pleasure that I, as Editor of this special issue, in conjunction

with the entire editorial team of Human Resource Management and the

Family Enterprise Research Conference, introduce three articles as part

of this special issue on the human resource management practices of

family businesses. Generally recognized as the most common organi-

zational form in the world, family businesses account for between

50 and 80% of jobs in the majority of countries around the world. Our

collective knowledge of the unique human resource practices and

challenges presented in the family business system, however, does

not match the ubiquity of these firms. While scholarly attention of

these issues has surely increased in recent years, researchers and

practitioners alike have expressed concerns about the field's lack of

development (James, Jennings, & Breitkreuz, 2012), as well as the

integration of family science research into the field as a whole

(Combs, Jaskiewicz, Shanine, & Balkin, 2018). It was with these gaps

in mind that this special issue was conceived and launched. Each of

the three articles accepted for publication are briefly discussed in the

paragraphs below.

In their study entitled “Managing family members: How monitoring

and collaboration affect extra-role behavior in family firms,”Eddleston,

Kellermanns, and Kidwell (2018) integrate agency and stewardship

theories and develop a hybrid view of human resource practices in

family firms. These authors argue that unique aspects of family busi-

ness systems create challenging human resource management issues

as they relate to family employees. These challenges require family

firms to achieve a proper balance between the potentially positive

features of family employees, such as increased organizational com-

mitment and altruism, with those that might prove harmful to the fam-

ily firm, such as increased nepotism and opportunism. They

hypothesize that family firms that balance monitoring activities of

family employees with a collaborative environment, namely in the

form of constructive confrontation, adaptability, and family harmony,

will benefit in the form of higher extra-role behaviors (ERB) from fam-

ily members. These authors further find that while agency-based mon-

itoring of family firm employees can dampen ERB, when used in

conjunction with stewardship-based practices of family harmony and

adaptability, monitoring can actually lead to higher levels of ERB from

family employees. They also find, however, that when mixed with

monitoring, constructive criticism can have a destructive effect,

increasing the negative effect of monitoring on family employees'

ERB. These authors conclude that family firm employees' contribu-

tions to the family firm were highest when both agency and steward-

ship practices were utilized to harness the benefits of discipline and

service from family members.

The other two articles examine different compensation-based

practices in family firms, namely the use of broad-based employee

ownership programs (BEOPs) and incentive pay schemes. In his study

entitled “A piece of the pie: The effects of familial control enhancements

on the use of broad-based employee ownership programs in family firms,”

Mullins (2018) examines family firms' use of BEOPs. Specifically, he

argues that while family firms tend to be highly committed employers,

which might foster the implementation of BEOPs, they also have a

strong desire to maintain control over the operations and their equity

interests of their firms. As a result of their desire to preserve their

socioemotional wealth, family firms' willingness to implement BEOPs

is tempered by their reluctance to dilute their ownership control of

the firms which would result from sharing ownership equity with non-

family employees. Integrating the socioemotional wealth and corpo-

rate governance literatures, Mullins hypothesizes that, in general,

family firms will be less likely than nonfamily firms to implement

BEOPs. However, when family firms possess different familial control

mechanisms, their willingness to adopt BEOPs may change. Specifi-

cally, considering only family firms, for those firms that have either

family Chief Executive Officers (CEOs), or founder CEOs, Mullins sug-

gests that the family's desire to preserve socioemotional wealth will

supersede any economic benefit the adoption of a BEOP might bring,

lowering the probability the firm will adopt such a program. However,

for those family firms that possess dual-class share structures (which

enable family firms to retain their voting rights), the loss of socioemo-

tional wealth will be tempered as dual-class structures would enable

the family to maintain ownership control and preserve their socioe-

motional wealth in the face of BEOPs. He further argues that the

effect of dual-class shares will be stronger in those family firms that

have family CEOs, and in those firms with founder, as opposed to

DOI: 10.1002/hrm.21939

Hum Resour Manage. 2018;57:955–956. wileyonlinelibrary.com/journal/hrm © 2018 Wiley Periodicals, Inc. 955