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Sins of the Father’s Firm: Exploring Responses to Inherited Ethical Dilemmas in Family Business

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Abstract

How do individuals respond when they perceive that their family business has been built upon unethical business conduct? Drawing on an expanded version of Hirschman’s typology of generic responses to declining situations (Exit, Voice and Loyalty: Responses to Decline in Firms, Organizations, and States, Harvard University Press, Cambridge, MA, 1970), which includes responses of Exit, Voice, Loyalty, and Neglect, we offer a model that predicts probability of intended response behavior as a function of normative obligation (i.e., what one perceives ought to be done), managerial discretion (i.e., what one perceives can be done), and successor commitment to the firm. The model is tested on 124 business school students exposed to a scenario depicting an inherited ethical dilemma occurring in a family business from Arthur Miller’s play All My Sons, and shows support for elements of the proposed framework. Most notable is a significant negative relationship between normative firm-directed commitment and the response of Neglect.

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Notes

  1. A copy of the evaluation instrument is available upon request from the first author.

  2. Our thanks to one of the manuscript’s reviewers for this observation.

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Acknowledgments

This paper won the Kennesaw State University/Cox Family Enterprise Center Best Family Business Paper at the 2011 Academy of Management Conference, San Antonio, TX. Reginald A. Litz gratefully acknowledges the support received for this research from the Centre for Professional and Applied Ethics at the University of Manitoba (Winnipeg, Canada), the Stu Clark Fellowship Program in Entrepreneurship at the Asper School of Business (Winnipeg, Canada), and the Toft Visiting Professorship of Family Business at the Center for Family Enterprise and Ownership in Jönköping International Business School (Jönköping, Sweden). Nick Turner acknowledges support from the Social Sciences and Humanities Research Council of Canada.

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  1. Asper School of Business, University of Manitoba, Winnipeg, MB, R3T 2N2, Canada

    Reginald A. Litz & Nick Turner

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  1. Reginald A. Litz
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Correspondence to Reginald A. Litz.

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Litz, R.A., Turner, N. Sins of the Father’s Firm: Exploring Responses to Inherited Ethical Dilemmas in Family Business. J Bus Ethics 113, 297–315 (2013). https://doi.org/10.1007/s10551-012-1305-7

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