4 - Family Business and Its Management

Summary

Central issues of family business are treated in Chapter 4. It is widely assumed that in establishing a new business family members are preferred employees as they are trusted. As it expands a business increasingly employs non-family members. In these circumstances kinship forms of address, irrespective of kin status, create familiarity and closeness. A significant literature reports that by these means pseudo-kinship or quasi-familial relations are formed in order to cultivate trust with non-kin individuals. Chapter 4 challenges these assumptions. It is shown, firstly, that among family members, rather than trust a number of other factors, including compliance with role obligations as well as monitored forms of reliability, xinyong and face considerations, govern relationships and authority structures. Secondly, as non-kin employees are recruited to a family business neither pseudo-kinship nor quasi-familial relationships are assumed nor market exchange relations engaged; rather, non-kin members of family firms are subject to an intentionally cultivated emotionalized guanxi relationship with the company. This arrangement means that intra-firm relations operate in conjunction with market relations in order to elicit obligatory feelings and maintain them, generating firm-specific social bonds between management and employees as well as between employees.