Is Nepotism Good or Bad? Types of Nepotism and Implications for Knowledge Management

Abstract

In contrast to the literature that portrays nepotism as generally problematic, we develop a conceptual model to explain why some family firms benefit from nepotism while others do not. We distinguish two types of nepotism based on how nepots are chosen. We elaborate the differences between entitlement nepotism and reciprocal nepotism. We propose that reciprocal (vs. entitlement) nepotism is associated with three family conditions that indicate generalized (vs. restricted) social exchange relationships between family members. We also suggest that generalized social exchanges are valuable to firms because they facilitate tacit knowledge management that can lead to competitive advantage.

Keywords

family business nepotism social exchange theory tacit knowledge management

Get full access to this article

View all access options for this article.

References

Anderson

R. C.

Reeb

D. M.

(2003). Founding family ownership and firm performance: Evidence from the S&P 500. Journal of Finance, 58, 1301-1328.

Anderson

R. C.

Reeb

D. M.

(2004). Board composition: Balancing family influence in S&P 500 firms. Administrative Science Quarterly, 49, 209-237.

Andrews

K. L.

Delahay

B. L.

(2000). Influences on knowledge processes in organisational learning: The psychosocial filter. Journal of Management Studies, 37, 797-810.

Argote

Ingram

(2000). Knowledge transfer: A basis for competitive advantage in firms. Organizational Behavior and Human Decision Processes, 82, 150-169.

Arregle

J. L.

Hitt

M. A.

Sirmon

D. G.

Very

(2007). The development of organizational social capital: Attributes of family firms. Journal of Management Studies, 44, 73-95.

Augier

Shariq

S. Z.

Vendelø

M. T.

(2001). Understanding context: Its emergence, transformation and role in tacit knowledge sharing. Journal of Knowledge Management, 5, 125-136.

Barney

J. B.

(1991). Firm resources and sustained competitive advantage. Journal of Management, 17, 99-120.

Beckhard

Dyer

W. G.

(1983). Managing continuity in the family-owned business. Organizational Dynamics, 12, 5-12.

Bellow

(2003). In praise of nepotism. New York, NY: Random House.

10.

Berger

P. L.

Luckmann

(1967). The social construction of reality. New York, NY: Doubleday Anchor.

11.

Bhappu

A. D.

(2000). The Japanese family: An institutional logic for Japanese corporate networks and Japanese management. Academy of Management Journal, 25, 409-415.

12.

Blau

P. M.

(1964). Exchange and power in social life. New York, NY: John Wiley.

13.

Bloch

(1973). The long term and the short term: The economic and political significance of the morality of kinship. In Goody

(Ed.), The character of kinship (pp. 75-87). London, England: Cambridge University Press.

14.

Bloom

Van Reenen

(2007). Measuring and explaining management practices across firms and countries. Quarterly Journal of Economics, 122, 1351-1408.

15.

Boland

R. J.

Jr. Tenkasi

R. V.

(1995). Perspective making and perspective taking in communities of knowing. Organization Science, 6, 350-372.

16.

Bowen

D. E.

Ostroff

(2004). Understanding HRM firm performance linkages: The role of the “strength” of the HRM system. Academy of Management Review, 29, 203-221.

17.

Brown

S. L.

Brown

R. M.

(2006). Selective investment theory: Recasting the functional significance of close relationship. Psychological Inquiry, 17, 1-29.

18.

Cabrera-Suárez

De Saá-Pérez

García-Almeida

(2001). The succession process from a resource- and knowledge-based view of the family firm. Family Business Review, 14, 37-47.

19.

Chirico

(2008). Knowledge accumulation in family firms. Evidence from four case studies. International Small Business Journal, 26, 433-462.

20.

Chirico

Salvato

(2008). Knowledge integration and dynamic organizational adaptation in family firms. Family Business Review, 21, 169-181.

21.

Chrisman

Chua

Litz

(2003). Extending the theoretical horizons of family business research. Entrepreneurship Theory and Practice, 27, 331-338.

22.

Chrisman

Chua

Pearson

Barnett

(2012). Family involvement, family influence, and family-centered non-economic goals in small firms. Entrepreneurship Theory and Practice, 36, 267-293.

23.

Chua

Chrisman

Sharma

(1999). Defining the family business by behavior. Entrepreneurship Theory and Practice, 23, 19-39.

24.

Cialdini

R. B.

(1996). Social influence and the triple tumor structure of organizational dishonesty. In Messick

D. M.

Tenbrunsel

A. E.

(Eds.), Codes of conduct: Behavioral research into business ethics (pp. 44-58). New York, NY: Russell Sage Foundation.

25.

Coff

R. W.

Coff

D. C.

Eastvold

(2006). The knowledge-leveraging paradox: How to achieve scale without making knowledge imitable. Academy of Management Review, 31, 452-465.

26.

Cohen

W. M.

Levinthal

D. A.

(1990). Absorptive capacity: A new perspective on learning and innovation. Administrative Science Quarterly, 35, 128-152.

27.

Collins

C. J.

Smith

K. G.

(2006). Knowledge exchange and combination: The role of human resource practices in the performance of high-technology firms. Academy of Management Journal, 49, 544-560.

28.

Cosmides

Tooby

(1992). Cognitive adaptations for social exchange. In Barkow

J. H.

Cosmides

Tooby

(Eds.), The adapted mind: Evolutionary psychology and the generation of culture (pp. 163-228). New York, NY: Oxford University Press.

29.

Cotterell

Eisenberger

Speicher

(1992). Inhibiting effects of reciprocation wariness on interpersonal relationships. Journal of Personality and Social Psychology, 62, 658-668.

30.

Coyle-Shapiro

A.-M.

Shore

L. M.

(2007). The employee-organization relationship: Where do we go from here? Human Resource Management Review, 17, 166-179.

31.

Cropanzano

Mitchell

M. S.

(2005). Social exchange theory: An interdisciplinary review. Journal of Management, 31, 874-900.

32.

Cruz

C. C.

Gomez-Mejia

L. R.

Becerra

(2010). Perceptions of benevolence and the design of agency contracts: CEO-TMT relationships in family firms. Academy of Management Journal, 53, 69-89.

33.

Csikszentmihalyi

(1990). Flow: The psychology of optimal experience. New York, NY: Harper & Row.

34.

Dabos

G. E.

Rousseau

D. M.

(2004). Mutuality and reciprocity in the psychological contracts of employees and employers. Journal of Applied Psychology, 89, 52-72.

35.

Davis

J. H.

Schoorman

F. D.

Donaldson

(1997). Toward a stewardship theory of management. Academy of Management Review, 22, 20-47.

36.

D’Eredita

M. A.

Barreto

(2006). How does tacit knowledge proliferate? An episode-based perspective. Organization Studies, 27, 1821-1841.

37.

Fiegener

Brown

Prince

File

(1994). A comparison of successor development in family and nonfamily businesses. Family Business Review, 7, 313-329.

38.

Fiegener

Brown

Prince

File

(1996). Passing on strategic vision. Journal of Small Business Management, 34, 15-26.

39.

Fiol

C. M.

(1994). Consensus, diversity, and learning in organizations. Organization Science, 5, 403-420.

40.

Foa

U. G.

Foa

E. B.

(1975). Resource theory of social exchange. Morristown, NJ: General Learning Press.

41.

Fulmer

I. S.

Gerhart

Scott

K. S.

(2003). Are the 100 best better? An empirical investigation of the relationship between being a “great place to work” and firm performance. Personnel Psychology, 56, 965-993.

42.

Gedajlovic

Carney

(2010). Markets, hierarchies & families: Towards a transaction-cost theory of the family enterprise. Entrepreneurship Theory and Practice, 34, 1145-1171.

43.

Ghemawat

Spence

A. M.

(1985). Learning curve spillovers and market performance. Quarterly Journal of Economics, 100, 839-852.

44.

Gouldner

A. W.

(1960). The norm of reciprocity: A preliminary statement. American Sociological Review, 25, 161-178.

45.

Habbershon

T. G.

Williams

M. L.

(1999). A resource-based framework for assessing the strategic advantages of family firms. Family Business Review, 12, 1-26.

46.

Hamilton

W. D.

(1964). The genetic evolution of social behaviour: I and II. Journal of Theoretical Biology, 7, 1-52.

47.

Hatch

N. W.

Dyer

J. H.

(2004). Human capital and learning as a source of sustainable competitive advantage. Strategic Management Journal, 25, 1155-1178.

48.

Hatch

N. W.

Mowery

D. C.

(1998). Process innovation and learning by doing in semiconductor manufacturing. Management Science, 44, 1461-1477.

49.

Hitt

M. A.

Bierman

Shimizu

Kochhar

(2001). Direct and moderating effects of human capital on strategy and performance in professional firms: A resource-based perspective. Academy of Management Journal, 44, 13-28.

50.

Holste

J. S.

Fields

(2010). Trust and tacit knowledge sharing and use. Journal of Knowledge Management, 14, 128-140.

51.

Homans

G. C.

(1958). Social behavior as exchange. American Journal of Sociology, 63, 597-606.

52.

Homans

G. C.

(1961). Social behavior: Its elementary forms. New York, NY: Harcourt Brace.

53.

Hui

C. H.

(1988). Measurement of individualism-collectivism. Journal of Research in Personality, 22, 17-36.

54.

Janssen

Van de Vliert

Veenstra

(1999). How task and person conflict shape the role of positive interdependence in management teams. Journal of Management, 25, 117-142.

55.

Jung

(1990). The role of reciprocity in social support. Basic and Applied Social Psychology in Social Support, 11, 243-253.

56.

Kellermanns

Eddleston

(2004). Feuding families: When conflict does a family firm good. Entrepreneurship Theory and Practice, 28, 209-228.

57.

Kets de Vries

(1996). Family business: Human dilemmas in the family firm. London, England: Thomson Business Press.

58.

Kogut

Zander

(1993). Knowledge of the firm and the evolutionary theory of the multinational corporation. Journal of International Business Studies, 24, 625-645.

59.

La Porta

Lopez-de-Silanes

Shleifer

(1999). Corporate ownership around the world. Journal of Finance, 54, 471-517.

60.

Lave

Wenger

(1991). Situated learning: Legitimate peripheral participation. Cambridge, England: Cambridge University Press.

61.

Le Breton-Miller

Miller

(2006). Why do some family businesses out-compete? Governance, long-term orientations, and sustainable capability. Entrepreneurship Theory and Practice, 30, 731-746.

62.

Lee

K. S.

Lim

G. H.

Lim

W. S.

(2003). Family business succession: Appropriation risk and choice of successor. Academy of Management Review, 28, 657-666.

63.

Levin

D. Z.

Cross

(2004). The strength of weak ties you can trust: The mediating role of trust in effective knowledge transfer. Management Science, 50, 1477-1490.

64.

Lévi-Strauss

(1969). The elementary structures of kinship. Boston, MA: Beacon Press.

65.

Liebeskind

J. P.

(1996). Knowledge, strategy, and the theory of the firm. Strategic Management Journal, 17, 93-107.

66.

Litwak

Figueira

(1969). Technological innovation and theoretical functions of primary groups and bureaucratic structures. American Journal of Sociology, 73, 468-481.

67.

Litwak

Szelenyi

(1969). Primary group structures and their functions: Kin, neighbors, and friends. American Sociological Review, 34, 465-481.

68.

Long

R. G.

Mathews

K. M.

(2011). Ethics in the family firm: Cohesion through reciprocity and exchange. Business Ethics Quarterly, 21, 287-308.

69.

Lubatkin

M. H.

Durand

Ling

(2007). The missing lens in family firm governance theory: A self-other typology of parental altruism. Journal of Business Research, 60, 1022-1029.

70.

Lubatkin

M. H.

Schulze

W. S.

Ling

Dino

R. N.

(2005). The effects of parental altruism on the governance of family-managed firms. Journal of Organizational Behavior, 26, 313-330.

71.

Malinowski

(1922). Argonauts of the western Pacific: An account of native enterprise and adventure in the archipelagos of Melanesian New Guinea. London, England: Routledge.

72.

Mattessich

Hill

(1976). Family enterprise and societal development: A theoretical assessment. Journal of Comparative Family Studies, 7, 147-158.

73.

Matusik

S. F.

Hill

C. W. L.

(1998). The utilization of contingent work, knowledge creation, and competitive advantage. Academy of Management Review, 23, 680-697.

74.

Mayer

R. C.

Davis

J. H.

Schoorman

F. D.

(1995). An integrative model of organizational trust. Academy of Management Review, 20, 709-734.

75.

Meeker

B. F.

(1971). Decision and exchange. American Sociological Review, 36, 485-495.

76.

Miller

Le Breton-Miller

(2005). Managing for the long run: Lessons in competitive advantage from great family business. Cambridge, MA: Harvard Business School Press.

77.

Miller

Le Breton-Miller

Lester

R. H.

(2011). Family and lone founder ownership and strategic behavior: Social context, identity, and institutional logics. Journal of Management Studies, 48, 1-25.

78.

Miller

Le Breton-Miller

Lester

R. H.

Cannella

A. A.

Jr. (2007). Are family firms really superior performers? Journal of Corporate Finance, 13, 829-858.

79.

Molm

L. D.

Collett

J. L.

Schaeffer

D. R.

(2007). Building solidarity through generalized exchange: A theory of reciprocity. American Journal of Sociology, 113, 205-242.

80.

Neyer

F. J.

Lang

F. R.

(2003). Blood is thicker than water: Kinship orientation across adulthood. Journal of Personality and Social Psychology, 84, 310-321.

81.

Nonaka

(1994). A dynamic theory of organizational knowledge creation. Organization Science, 5, 14-37.

82.

Pearson

A. W.

Carr

J. C.

Shaw

(2008). Toward a theory of familiness: A social capital perspective. Entrepreneurship Theory and Practice, 32, 949-969.

83.

Pérez-González

(2006). Inherited control and firm performance. American Economic Review, 96, 1559-1588.

84.

Pollak

R. A.

(1985). A transaction cost approach to families and households. Journal of Economic Literature, 23, 581-608.

85.

Rook

K. S.

(1984). The negative side of social interaction: Impact on psychological well-being. Journal of Personality and Social Psychology, 46, 1097-1108.

86.

Rook

K. S.

(1987). Reciprocity of social exchange and social satisfaction among older women. Journal of Personality and Social Psychology, 52, 145-154.

87.

Rousseau

D. M.

(1989). Psychological and implied contracts in organizations. Employee Responsibilities and Rights Journal, 2, 121-139.

88.

Rousseau

D. M.

(1990). New hire perceptions of their own and their employer’s obligation: A study of psychological contracts. Journal of Organizational Behavior, 11, 389-400.

89.

Rousseau

D. M.

(1995). Psychological contracts in organizations: Understanding written and unwritten agreements. Thousand Oaks, CA: Sage.

90.

Schulze

W. S.

Lubatkin

M. H.

Dino

R. N.

(2003). Toward a theory of agency and altruism in family firms. Journal of Business Venturing, 18, 473-490.

91.

Schulze

W. S.

Lubatkin

M. H.

Dino

R. N.

Buchholtz

A. K.

(2001). Agency relationship in family firms: Theory and evidence. Organization Science, 12, 99-116.

92.

Shore

L. M.

Tetrick

L. E.

Lynch

Barksdale

(2006). Social and economic exchange: Construct development and validation. Journal of Applied Social Psychology, 36, 837-867.

93.

Sirmon

Hitt

(2003). Managing resources: Linking unique resources, management and wealth creation in family firms. Entrepreneurship Theory and Practice, 27, 339-358.

94.

Stewart

(2003). Help one another, use one another: Toward an anthropology of family business. Entrepreneurship Theory and Practice, 27, 383-396.

95.

Szulanski

(1996). Exploring external stickiness: Impediments to the transfer of best practice within the firm. Strategic Management Journal, 17, 27-43.

96.

Szulanski

(2000). The process of knowledge transfer: A diachronic analysis of stickiness. Organizational Behavior and Human Decision Processes, 82, 9-27.

97.

Tsoukas

(2003). Do we really understand tacit knowledge? In Easterby-Smith

Lyles

M. A.

(Eds.), The Blackwell handbook of organizational learning and knowledge management (pp. 411-427). Malden, MA: Blackwell.

98.

Turner

K. L.

Makhija

M. V.

(2006). The role of organizational controls in managing knowledge. Academy of Management Review, 31, 197-217.

99.

Uehara

(1990). Dual exchange theory, social networks, and informal social support. American Journal of Sociology, 96, 521-557.

100.

Vinton

K. L.

(1998). Nepotism: An interdisciplinary model. Family Business Review, 11, 297-303.

101.

Weber

(1958). The Protestant ethic and the spirit of capitalism. New York, NY: Scribner.

102.

Wood

Robertson

J. E.

(1978). Friendship and kinship interaction: Differential effect on the morale of the elderly. Journal of Marriage and the Family, 40, 367-375.

103.

J. B.

Hom

P. W.

Tetrick

L. E.

Shore

L. M.

Jia

Song

L. J.

(2006). The norm of reciprocity: Scale development and validation in the Chinese context. Management and Organization Review, 2, 377-402.

104.

Yeung

H. W.-C.

(2000). Limits to the growth of family-owned business? The case of Chinese transnational corporations from Hong Kong. Family Business Review, 13, 55-70.

105.

Zahra

S. A.

(2010). Harvesting family firms’ organizational social capital: A relational perspective. Journal of Management Studies, 47, 345-366.

Supplementary Material

Please find the following supplemental material available below.

For Open Access articles published under a Creative Commons License, all supplemental material carries the same license as the article it is associated with.

For non-Open Access articles published, all supplemental material carries a non-exclusive license, and permission requests for re-use of supplemental material or any part of supplemental material shall be sent directly to the copyright owner as specified in the copyright notice associated with the article.

0.00 MB

16.00 MB

0.02 MB