parent–child relationships

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ParentChild

Relationships: Plantingthe Seeds of DeviantBehavior in theFamily FirmKimberly A. Eddleston

Roland E. Kidwell

We posit that parentchild relationships lead to subsequent leadermember exchange (LMX)differentiation in family firms. This differentiation shapes a childs behavior toward the firm.Altruism is proposed to further increase the effects of LMX differentiation on workplacebehavior by fostering feelings of entitlement or rebellion among out-group children andstrengthening in-group childrens commitment to the firm. Our article breaks new ground byexplaining how parentchild relationships and LMX can result in deviant behavior in familyfirms, how parental altruism can create vicious and virtuous circles of behavior and howstewardship and opportunism can occur within the same family firm.

Introduction

Family firms are unique in that their leaders aim to create a legacy for their childrenwhereby the next generation will eventually gain control of the firm and inherit thefamilys wealth (Miller, Steier & Le Breton-Miller, 2003). In turn, family business ownersface the challenge of bringing children into the firm as employees, defining their roles, andeventually preparing for succession.Yet, these leaders often find it difficult to successfullyintegrate their children into the business (Gersick, Davis, Hampton, & Lansberg, 1997).

Whereas a stewardship perspective suggests that children contribute to the family firmthrough pro-organizational behaviors (e.g., Eddleston & Kellermanns, 2007; Zahra,Hayton, Neubaum, Dibrell, & Craig, 2008), agency theory paints a very different pictureof childrens involvement in the firm. Family firm owners are often criticized for employ-ing children who are less able, committed, or ethical than the leader expected (Chrisman,Chua, & Litz, 2004). Some family firms suffer from opportunism and the consumption ofunearned perks by family members whereby it may be more likely to observe childrenshirking than working (Chrisman et al., p. 338). Accordingly, it has been suggested thatmany family firms suffer performance problems because the leaders children exhibit

Please send correspondence to: Kimberly A. Eddleston, tel.: (617) 373-4014; e-mail: [email protected], toRoland E Kidwell at rkidwell@uwyo edu

PTE &

1042-2587 2010 Baylor University


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deviant behaviors, exploiting the business for personal gain (Bennett, Thau, & Scouten,2005).

Workplace deviance is voluntary behavior that violates significant organizationalnorms and, in so doing, threatens the well-being of the organization and/or its members(Robinson & Bennett, 1997). It includes free riding, lying, insubordination, sabotage,abuse of privileges, harassment, theft, aggression, lack of regard for cost control, and drugand alcohol abuse. Deviance costs businesses more than $20 billion each year and causes

30% of business failures (Murphy, 1993; Tomlinson & Greenberg, 2005). Other negativerepercussions include lawsuits, productivity losses, higher expenses, and loss of reputa-tion. Although research rooted in agency theory acknowledges the costs associated withopportunism, this research does not address why some individual family members aremore likely to act deviantly than others. Further, while this research highlights the centralrole parents play in producing agency costs (Lubatkin, Schulze, Ling, & Dino, 2005;Schulze, Lubatkin, Dino, & Buchholtz, 2001), it portrays intra-family relationshipsamong parents and children as relatively homogeneous (Lubatkin, Durand, & Ling, 2007).Therefore, in contrast to the abundance of family firm research that applies stewardship oragency theory, viewing the family as either a resource or a constraint to the firm, we

recognize that a family may be comprised of both stewards and deviants.The purpose of this article is to offer an initial theory of workplace deviance in the

family firm. We focus on parentchild relationships (PCRs) as the root cause of deviancebecause parents are known to show preferential treatment toward some family members,have difficulty punishing children due to spillover effects on family relationships, andcontinue to act generously toward their children even when they display dysfunctionalbehaviors (i.e., Chrisman et al., 2004; Schulze et al., 2001). The importance of PCRs tolater working relations in the firm and the reciprocal nature of these relationships havebeen largely overlooked in the literature to date (for an exception, see Lubatkin et al.,2007). Such early connections should be focal in studying family firm deviant behavior

becauseunlike in nonfamily firms where leader and follower exchanges begin on thefirst day of employmenta childs actions at work are rooted in a rich history of priorinteractions and routines that the parent and child draw upon in deciding how to behave.We apply leadermember exchange (LMX) theory to explain how parents can developdifferent working relationships with each child employee. In turn, the LMX between theparent and child is argued to predict a childs propensity to engage in workplace deviance.Lastly, in keeping with our focus on parentchild interactions, we propose that altruismfurther perpetuates the workplace deviance of children with weak LMX relationships. Byfocusing on various elements characterizing parentchild interactions, we offer a theorythat attempts to capture the complexity of workplace deviance in the family firm and

explain why some children become assets to their firms, while others engage in deviancethat may ultimately harm the firm.

This article makes three primary contributions. First, by focusing on PCRs before achild enters the firm and then LMX during the childs employment, our theory highlightsthe uniqueness of family firms and the importance of considering family relationshipswhen investigating these firms. It also demonstrates the need for future research to take amore micro-view of family firms whereby the individual experiences and behaviors offamily members are considered. Second, we contribute to the leadership literature byunderscoring how elements of LMX may vary in the family firm context and by demon-strating how LMX may contribute to deviance in family firms. Whereas a strong interest

in advancing LMX theory continues, there has been little consideration of its relationshipto dysfunctional behavior at work, despite the important role of the leader in influencingsubordinates decisions to engage in unethical behavior at work (Trevio & Brown 2005)


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Lastly, although research has focused on sibling rivalry (i.e., Friedman, 1991; Taylor &Norris, 2000) and perceptions of ethical violations of family firms (e.g., Gallo, 1998), tothe best of our knowledge, this is the first attempt to develop a theory of workplacedeviance in family firms. It may seem inconceivable that a child employee would engagein workplace deviance, but stories abound about children stealing cash from the firm, notshowing up to work, and sabotaging business operations. By focusing on PCRs outsideand inside the firm, and how differing perceptions of parental altruism affect those

relationships, we contribute to research on how firm leaders can successfully integratetheir children into the family business.

ParentChild Relationships (PCRs) and LMX

Attachment theory proposes that early PCRs guide the adult childs interaction withothers and perceptions of the social world (Rauer & Volling, 2007). The PCR is amulti-dimensional concept that captures the affection and emotional support exchanged

between a parent and child (Lye, 1996). While strong PCRs reflect secure attachments andpositive affect and contribute to a persons conscience development and behavioralrestraint (Laible & Thompson, 2000), nonresponsive and weak PCRs can significantlyharm a childs commitment to a parent (Kochanska & Thompson, 1997). The transac-tional model of PCR recognizes that parents often develop different relationships witheach child, whereby parents treat children of divergent ages, gender, and personalitydifferently (Cook, 2001). More specifically, this model focuses on the mutual adjustmentand adaptation that occurs in a parentchild dyad, viewing the parents and childsbehavior as both the cause and consequence of their interactions (Cook). Over timepatterns in behavior emerge that reflect the level of affection and support exchanged in a

specific PCR. As such, the PCR appears to be an initial element that frames an adultchilds relationship with his/her parentboss and explains how parentchild relations canvary in the same family. Since 80% of U.S. families have multiple children (Rauer &Volling) and research shows two-thirds of next-generation family members have a siblingworking in the family business (Handler, 1991), it is important to consider how a parentsrelationship with one child can be quite different than that with another.

Parents must often divide limited time and resources among children who compete fortheir attention and support (Lye, 1996). Starting at a young age, individuals are aware ofthe attention and affection a parent directs toward a sibling (Dunn & Kendrick, 1982).This sensitivity to the level of parental love, affection, and support one receives compared

with siblings continues through adulthood (Bedford & Volling, 2004). Further, researchindicates that the majority of individuals perceive some degree of parental favoritism intheir families (Bedford & Volling; Dunn & Kendrick; Zervas & Sherman, 1994). Mostimportant, research indicates it is the perception of favoritism, rather than a parents actualbehavior, that has the greatest effect on a child (Rauer & Volling, 2007; Zervas &Sherman). Similarly, it may be a childs perception of the PCR that has the greatest impacton the childs behavior. When PCR is considered in the family firm, the perception ofpreferential treatment vis--vis other children may affect a childs behavior in the firm.

Within family firms, the parent and child are likely to draw upon the established PCRwhen deciding how to interactunlike in nonfamily firms where leadersubordinate

relations begin on the first day of employment. In turn, a childs attachment to the firmmay grow or be stifled based on the PCR. Whereas it is true that a childs positive jobperformance may strengthen a weaker PCR children who enjoy a stronger PCR are


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initially best positioned to work side by side with their parents while those with a weakerPCR may struggle. To provide evidence for this conclusion, we apply LMX theoryarelationship-based approach to leadership (Graen & Uhl-Bien, 1995)to explain howPCR affects the way a parentleader and childmember interact in the family firm.

According to LMX theory, because leaders have a limited amount of time, energy, anddiscretion, they differentiate how they distribute resources among subordinates causingsome relationships to evolve into high-quality exchanges and others to be of lower quality

(Graen & Scandura, 1987; Henderson, Liden, Glibkowski & Chaudhry, 2009; Lee, 2001).As a result of the pattern of interactions between leaders and subordinates, ingroups andoutgroups are formed (Bauer & Green, 1996; Henderson et al.). Research findings indicatethat 90% of work units perceive LMX differentiation reflected through the formation ofLMX ingroups and outgroups (Liden & Graen, 1980; Liden, Sparrowe & Wayne, 1997).Due to LMX differentiation, the experiences and cognitions of subordinates are shaped asthey evaluate the dynamics and outcomes of their own dyadic relations in comparison tothose of other leadersubordinate dyads (Henderson et al., p. 519). Some subordinatesachieve in-group status with their leaders, forming high-quality relationships that includesocial exchanges that transcend contractual obligations. In these relationships, leaders may

offer sponsorship, mentoring, and empowerment in exchange for subordinate organiza-tional citizenship behaviors, loyalty, and task performance (Henderson et al.). In contrast,other subordinates are members of the outgroup whereby their relationship with the leaderis restricted to fulfilling contractual obligations (Liden & Graen). Due to lower-qualityexchanges with their leader, these subordinates often perceive the workplace as unfair(Lee) and lack a sense of belonging to the firm (Stamper & Masterson, 2002).

Unlike nonfamily firms, a relationship between a parentleader and childmemberhas evolved well before the childs employment in the firm. As such, the development ofLMX ingroups and outgroups may be based on parentchild dyadic relations that formedbefore the child entered the firm. In a family where all PCRs are relatively strong, one

could imagine a scenario where all children working in the firm would be in-groupmembers, which has been a standard assumption in the family firm literature (cf. Barnett& Kellermanns, 2006; Carsrud, 2006). However, research on PCR indicates that chil-drens perceived parental favoritism continues through adulthood (Bedford & Volling,2004). As such, in a family firm with multiple subordinate family members, both in-groupand out-group LMX differentiation seems likely.

Regarding the family literature, research suggests that a stronger PCR contributes toa childs willingness to embrace parental values (Kochanska & Thompson, 1997) andto form a strong bond with the parent (Boll, Ferring, & Filipp, 2003). In LMX research,strong attachment of a subordinate to a leader is a key characteristic of in-group status. In

turn, research indicates that perceived support from ones leader influences an employeesattachment to the firm (Wiesenfeld, Raghuram, & Garud, 2001). Therefore, once the childenters the firm, a high-quality LMX may be formed based on the existing PCR. Childrenwith a stronger PCR may be more likely to become in-group members in the family firm,working as loyal assistants to their parents.

Whereas children with a weaker PCR may avoid working in the family firm due tolack of identity with the firm or lack of affective or normative commitment to the firm,others may feel compelled to join the business because they make a calculative commit-ment (Sharma & Irving, 2005) to protect inheritance rights or access to the firmsresources. Such children may join and stay in the firm due to economic dependence, belief

that they lack career alternatives, a desire to maintain social appearances, or a wish toprotect their own childrens future place in the organization (McCann, 2000). However,these children are expected to gravitate toward out-group status The transactional model


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of PCR suggests that the bond between the parent and child will continue to diminish uponentering the firm, as lack of responsiveness of the parent toward the child, and the childslack of obligation toward the parent, pushes the child toward out-group status. Indeed,parental favoritism and competition among siblings for parental attention form relativelystable family niches (Rohde et al., 2003) and in the family firm, these niches may translateinto in-group and out-group status.

However, in proposing a relationship between PCR and LMX, it is important to

understand that a change in PCR in the family domain is likely to affect the relationshipin the business domain (LMX differentiation)a situation unique to family firms. Further,we acknowledge that a childs sound work performance may overcome a weaker PCR,allowing the child to attain in-group status; conversely, a child with a stronger PCR maybe a poor performer whose activities in the firm lead to a low quality LMX and thusweaken the PCR.

Yet, such scenarios may be uncommon because LMX differentiation is solidifiedrelatively early in the employment relationship. For example, research shows that subor-dinates job performance has less influence on LMX differentiation than interpersonalfactors (Liden, Wayne, & Stilwell, 1993). This leads us to propose that LMX relationships

in the firm solidify PCRs in a similar fashion to a self-fulfilling prophecy (Merton, 1948)and Pygmalion effect (Eden, 1990), where perceived parental attention leads children witha stronger PCR to display more positive in-group behaviors because a parent treats themaccording to a higher level of expectations. Conversely, children with a weaker PCRexperience a Golem effect (Babad, Inbar, & Rosenthal, 1982), reflecting a parents lowerexpectations. Parents perceptions shape their behavior toward the child, and the chil-drens perceptions of their standing are reinforced through this treatment, placing them ineither in-group or out-group status in the firm.

Proposition 1: The PCR is related to LMX differentiation in the family firm such thatchildren who perceive a stronger PCR are more likely to become in-group members,while those who perceive a weaker PCR are more inclined to become out-groupmembers.

LMX Differentiation and Deviance in the Family Firm

Much of the deviance research and its practical applications assume that individualswho violate established norms are engaging in negative behavior even though somedeviant behaviors can have positive long-term effects on the firm, such as whistle-

blowing, exercising voice, and counterrole behavior (Warren, 2003). Our focus is not onthe positive potential of breaking norms but on the dysfunctional aspects of deviance andopportunism. For a behavior to be deviant, it must be intentional and voluntary, as opposedto behavior that is accidental or beyond ones control. Therefore, workplace deviance issaid to occur whenever an employee lacks motivation to conform to an organizationalnorm and/or becomes motivated to violate the norm (Robinson & Bennett, 1997). Inexplaining outcomes associated with LMX differentiation, two factors prominently fea-tured in the literature are interpersonal bonds and fairness perceptions (Henderson et al.,2009). Accordingly, in proposing a link between LMX differentiation and deviance infamily firms, we center our arguments on these factors.

As leaders establish different relationships with their subordinates, this differentiationinfluences the subordinates attitudes and contributions in their LMX and toward theorganization (Henderson et al 2009) This social bond creates a sense of obligation on


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the part of in-group members to reciprocate their leaders trust and support throughcitizenship behaviors and good performance (Erdogan, Liden, & Kraimer, 2006; Gerstner& Day, 1997). The more valuable the firm is to the employee, the less likely s/he is tojeopardize it by violating organizational norms (Huiras, Uggen, & McMorris, 2000;Robinson & Bennett, 1997). Because in-group members receive more benefits and leadersupport than out-group members (Lee, 2001), in-group members should feel a greatersense of obligation to uphold organizational norms. Indeed, in-group members display

more citizenship behaviors and support for their leaders, and show greater commitmentand performance than do out-group members (Gerstner & Day; Schriescheim, Castro, &Cogliser, 1999). In contrast, out-group members feel less responsible for organizationalgoals and less organizational attachment than do in-group members (Stamper & Master-son, 2002). Social bonding theory helps explain how a persons connection to othersaffects his/her propensity to behave deviantly (Bennett et al., 2005; Sims, 2002). Hollinger(1986) argued that an employees attachment, commitment, and involvement with a firminfluence his/her level of deviant behavior; employees who feel little attachment to theirfirms are more likely to be dysfunctional and to break organizational rules. Similarly,decreased feelings of loyalty to the firm have been found to increase the likelihood of

ethical rule-breaking by employees (Sims).Extending this to family firms, LMX relationships are expected to shape the childs

view of his/her role in the firm as well as his/her behavioral intentions and actions.Whereas children in the LMX ingroup find that strong obligations to their parents becomestrong obligations to the family firm, we argue that the diminished sense of obligationout-group children feel toward their leaderparents has potentially devastating effects.Although LMX research suggests that out-group members are more likely to leave theirorganizations due to lower satisfaction, commitment, and perceived performance (i.e.,Gerstner & Day, 1997; Schriescheim et al., 1999), the family firm presents a unique LMXsituation in which an out-group childs sense of dependence and calculative commitment

may persuade him/her to stay in the firm. Further, because children typically remainsubordinate to their parents in the firm, effects of LMX may be exacerbated in familyfirms. Out-group children may see their status as reflecting their place in the firm as wellas their place in the family, providing twice the incentive to engage in deviance.

More specifically, the transactional model of parentchild relations, applied to thefamily business context, would suggest that children in an out-group exchange with aleaderparent will come to feel less and less internal obligation, cooperation, and com-mitment to their parents due to their poor working relationship. Indeed, children whoperceive themselves to be disfavored by a parent tend to feel less responsible and obligatedto please or help the parent than children who see themselves as favored (Neale, 1986). As

such, out-group children may feel little responsibility for the assets of the family firm andmay lack a sense of duty to help the family firm prosper. When employees lack apsychological bond with their leaders, particularly when they feel this bond should bestronger, they are more likely to act out negatively (Robinson, 1996). Out-group statusmay be particularly devastating to a child because s/he expects preferential treatmentgiven his/her family status. Further, disfavored children are likely to hold their parent(s)responsible for their unfavorable treatment, leading the children to behave aggressivelytoward the parent(s) (Weiner, 2001)and, by extension, the family firm.

Additionally, because LMX differentiation provokes the comparison of leadersubordinate dyads, fairness perceptions are critical in predicting subordinates behavior

(Henderson et al., 2009; Lee, 2001). In family firms, fairness concerns are intense becausefamily members compare themselves with other relatives based on their status at work aswell as their status in the family (Rosenblatt deMik Anderson & Johnson 1985) Family


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members often believe they have more rights than others due to their family status(Bennett et al., 2005). When a child then perceives him/herself to be in the outgroup,feelings of unfairness and inequity may arise that lead to deviant behavior. For example,out-group status appears to be linked to feelings of inequity and unfair treatment (Hend-erson et al.; Lee), and family employees who perceive inequity and unfair treatment tendto feel the firm owes them (Bennett et al.). Many deviant acts are provoked by feelingsof inequity or unfair treatment and are directed toward the parties to blame (Judge, Scott,

& Ilies, 2006; Robinson & Bennett, 1997). Equity theorists suggest that after feelingwronged, individuals seek to achieve balance by reducing ones inputs, increasing onesoutcomes, reducing outcomes of the wrongdoer, or increasing inputs of the wrongdoer(McLean Parks & Kidder, 1994). Because disfavored children have been found to feelanger and resentment toward perceived offending parent(s) (e.g., Kowal, Krull, & Kramer,2006), it follows that those in the outgroup are more likely to engage in workplacedeviance than in-group members.

Proposition 2: LMX differentiation in the family firm is related to workplace devi-ance in that out-group children are more likely to engage in workplace deviance than

in-group children.

The Vicious (and Virtuous) Circle of Parental Altruism

Altruism is a central concept that distinguishes family firms from other institutionalforms. Altruism arises from a parents sense of responsibility for the well-being of theirchildren. However, in the family firm, altruism can extend to the decision processes andactions of family firm leaders whereby the interests of the children are given precedence(Lubatkin et al., 2007). When family firm leaders act more like parents than owners,

altruism can produce problems with parental self-control, moral hazard, adverse selection,and shirking of responsibilities (Chrisman et al., 2004; Chua, Chrisman, & Bergiel, 2009;Schulze et al., 2001). Altruism appears to engender unique problems in family firmsbecause: (1) parents tend to be far more generous to their children than children are to theirparents, (2) parents act as firm leaders and control resources thus giving them the capacityto be generous to children, and (3) altruism can hamper a parents ability to monitor anddiscipline their children (Chua et al.; Lubatkin et al., 2005). Accordingly, Lubatkin andcolleagues report that The importance of parental altruism in the family firm cannot beoverstated (Lubatkin et al., 2005, p. 326).

We build on recent work on altruism in the family firm (i.e., Chua et al., 2009;

Eddleston & Kellermanns, 2007; Lubatkin et al., 2007) to propose that altruism can takeon several possible forms that produce different circumstances. In line with previousresearch, we see altruism as a key difference between family and nonfamily firms becausefamily business leaders are likely to behave altruistically toward family employees but nottoward nonfamily employees (Chua et al.). However, our view of altruism departs fromprevious research in that we do not assume all children react to a parents altruism in asimilar manner. Rather, we argue that whether a child has an in-group or out-group LMXrelationship influences how s/he perceives and interprets a parents altruism. Becausedeviant behavior is typically preceded by a type of provocation (Robinson & Bennett,1997), we argue that altruism may intensify workplace deviance by out-group children,

spurring a vicious circle of behavior. In contrast, we argue that in-group children are likelyto perceive altruism as a sign of support and cooperation leading them to reciprocate aparents altruism encouraging a virtuous circle of behavior


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Following Bernheim and Starks (1988) conclusion that love and compatibility aredistinguishable, we argue that parental altruism, PCR, and LMX are clearly distinctconcepts. Whereas a parent may project a preference for one child over another, it is oftenexpected the parent will provide for all children equally. Indeed, parental favoritism ismost often showed through the devotion of greater attention or praise (Zervas & Sherman,1994). Altruism, on the other hand, is a trait endogenous to a parents basic nature; a traitthat carries over into the family firm context from the family domain (Lubatkin et al.,

2005). As such, even though a child may be an out-group member, a parent still feels asense of responsibility for the child, manifested through altruism. These feelings maycreate a disastrous situation, particularly due to the guilt associated with having anout-group relationship with a child.

Guilt is a common source of altruism (Regan, 1971). In families, guilt acts as amechanism that secures interpersonal bonds by demonstrating ones affection for anotherand motivating the party that feels guilty to compensate the victim (Baumeister, Stillwell,& Heatherton, 1994). Parents can feel immense guilt when they dislike or disfavor a child(Pickering, 1991; Siegel & Robertiello, 1987). This guilt may weaken parents resolve todiscipline the child, leading the parent to meet the childs demands and spoil the child

(Pickering).In interpreting a parents altruistic behavior, children define what normal family

responsibilities are based on their personal experiences (Simoni & Trifiletti, 2004). Chil-dren who lack strong bonds with their parentleader but receive generous gifts fromhim/her may view these gifts as entitlements and a parental responsibility. Such childrenmay perceive these gifts as an attempt by the parent to compensate for past wrongs and asa substitute for a parents affection. Lubatkin et al. (2007) suggest that when altruismspoils a child, it leads the child to demonstrate egotistical behaviors and to manipulate theparents attention. As such, altruism may create feelings of entitlement because it encour-ages out-group children to see the family firm leader as having the responsibilities of a

parentto care and provide for the childas opposed to the responsibilities of a boss.Altruism can induce out-group children to believe they have been denied their rightfulshare of love and affection and therefore have a claim to the family firms resources andwealth, regardless of their contributions to the firm. That is, they may perceive the normsof the family, which stress resource allocation based on need, as taking precedence overbusiness norms, which stress merit (Van der Heyden, Blondel, & Carlock, 2005). Forinstance, a child may feel s/he can use a company vehicle for personal use because itbelongs to the parents firm, or a child may feel s/he can ignore company policies becauses/he is family. Further, altruism may encourage an out-group child to behave opportunis-tically because it hampers a parents willingness to discipline a child and compels parents

to forgive a childs indiscretions (Lubatkin et al.).The anticipation that a parent will not take action against an out-group child to punish

bad behavior leads the child to behave as s/he desires (Muehlheusser & Roider, 2008). Achilds feeling of residual claim on the family firmdemonstrated through altruismmay then allow the child to rationalize deviant behavior. Ability to rationalize workplacedeviance is important because it allows employees to behave deviantly without guilt orembarrassment (Robin, 1974), encouraging them to engage in more deviance. It alsoallows the individual to alter ones perception of the behavior or interpretation of norms(Robinson & Bennett, 1997). In other words, a parents generosity may lead out-groupchildren to feel entitled to engage in deviance due to perceived family status or belief that

family norms, which stress allocation of resources based on need apply.Additionally, if an out-group child perceives his/her parents altruism as paternalistic,whereby the parent acts generously so as to coerce the child (Lubatkin et al 2007)


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the childs deviance may become more pronounced. When parents aim to manipulate theirchilds behavior by offering take it or leave it gifts (Lubatkin et al.), they may intensifythe transactional nature of the out-group LMX. Children who believe their parents aretrying to control them are likely to develop resentful opposition (Dodge, Coie, & Lynman,2006). In particular, children who lack a bond with their parents are likely to perceiveparental power as malevolent and threatening, and as a consequence they respond withresentment and opposition (Kochanska, Barry, Stellern, & OBleness, 2009). Accordingly,

out-group children may perceive parental altruism as coercive and a display of calculativeparental power that causes them to rebel. Indeed, when individuals lack a sense of powerin their organizations and feel coerced, they are more likely to engage in workplacedeviance (Litzky, Eddleston, & Kidder, 2006). Therefore, out-group children may becomeembittered when they perceive altruism as coercive, causing them to rebel and increasingthe likelihood of deviance.

Therefore, altruism is expected to raise the level of workplace deviance by out-groupchildren. Those who perceive their parents altruism as an entitlement generate feelings ofresidual claim on the family firm, leading to deviance. Although these children may notaim to be deviant or harmful, their behavior is still considered deviant because they intend

to benefit from the behavior and the behavior is in opposition to organization norms(Robinson & Bennett, 1997). In contrast, out-group children who view parental altruismas coercive are likely to feel resentment and therefore seek to rebel (Lubatkin et al., 2007).When employees feel outrage and anger toward a person, deviance is a way to releasefrustration and resolve disparities (Robinson & Bennett). As such, the deviant behavior bythese children may be more purposeful and serious in nature.

However, a very different scenario is expected from in-group children. As Lubatkinand colleagues suggest, parental altruism would not engender agency costs if the altru-istic ties among family members were uniformly strong and symmetric (Lubatkin et al.,2005, p. 319). Due to the trust, cooperation, and support exchanged between in-group

members and their leaders (Sparrowe & Liden, 2005), altruism may encourage in-groupchildren to reciprocate parental altruism. Parents who encourage their children to valuereciprocal altruism should benefit from having reliable agents working in the family firm(Lubatkin et al., 2005, 2007). For example, favored children tend to perceive an obliga-tion for reciprocity toward the parents, that is, to repay the advantages they receive fromthem (Boll et al., 2003, p. 484). This mutually reinforcing altruistic behavior is consistentwith the stewardship perspective of altruism in the family firm (Eddleston & Kellermanns,2007). Strong social ties encourage individuals to subordinate personal goals to firm goals(Corbetta & Salvato, 2004). Thus, in-group children may perceive their parents altruismas complementary to their LMX relationship and as something to reciprocate.

Indeed, parental altruism may enhance the connection in-group children feel to thefamily firm. Altruism appears to promote and maintain the family bond (Corbetta &Salvato, 2004) by fostering loyalty, interdependence, and commitment to the familyfirm (Ward, 1987). Parents not only treat in-group children well at work as the boss, buttreat them well within the family, as the parent, both materially and psychologically.When a child perceives his/her parents altruism as rooted in norms of reciprocity andco-dependency, the child is less likely to become spoiled by the altruism or to feelentitled (Lubatkin et al., 2007). Accordingly, in-group children are more apt to perceivetheir parents altruism as a signal for reciprocity. Thus, altruism has the potential toincrease the commitment in-group children have toward the family firm by intensifying

the parental attention these children receive; they have insider status at work, and theyare well-provided for by their parents, spurring reciprocity and increasing attachment tothe firm


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From a family systems point of view, compensatory processes may further encour-age in-group children to refrain from workplace deviance. Social compensation theory(Williams & Karau, 1991) explains how individuals compensate for poor performanceof group members when they believe efforts of others are inadequate. The loyalty andaltruism in-group children share with a parent may encourage these children to forgivethe wrongdoing of a sibling to maintain the family unit. Favored children can becomeprotective and self-sacrificing toward a less-favored sibling, compensating for the sib-

lings weaknesses (Rosner, 1985). Further, research on ethical behavior demonstrates thatdue to self-categorization processes that induce guilt, team members often compensate foranothers transgressions when there are external observers (Gino, Gu, & Zhong, 2009).This suggests that in-group children may try to compensate for the workplace deviance ofa sibling to improve family image and to make restitution with nonfamily employees.However, compensatory actions of an in-group child can limit an out-group childs senseof responsibility (Rosner), further encouraging the childs deviant behavior.

To summarize, parents can behave in altruistic ways toward both in-group and out-group children, but as argued here, the altruism will be perceived differently based on thechilds LMX status. Ingroup children who have strong relationships with parents will tend

to view altruism as a further expression of love. Their strong bond with their parentencourages them to reciprocate their parents altruism, precluding them from feelingdeprived in the family firm and lessening their proclivity toward deviance. As a result, thein-group childs experience resembles a virtuous circle. The strong PCR leads to ahigh-quality LMX that encourages the in-group child to refrain from workplace deviance.Altruism further fosters the childs commitment to the parent promoting reciprocal altru-ism toward the parent, and, by extension, the family firm. In turn, the childs commitmentto the parent and the family firm is likely to reinforce PCR and LMX.

On the other hand, out-group children believe they have been denied love andattention and thus they may perceive they deserve compensation for being denied in-group

status. In this case, altruism is viewed as a parents responsibility and a substitute for lovecausing out-group children to gain a sense of entitlement that increases deviance. Alter-natively, out-group children may perceive parental altruism as coercive. In this instance,the out-group child is likely to rebel by behaving in a deviant manner. Thus, altruismeither spoils an out-group child or causes the child to rebel, creating a vicious circle.Weaker PCR leads to low-quality LMX, which encourages the out-group child to engagein workplace deviance. Altruism exacerbates the out-group childs propensity towardworkplace deviance due to the sense of entitlement or rebellion it creates. In turn, thechilds deviant behavior is likely to further hurt PCR and LMX.

Proposition 3: Parental altruism moderates the relationship between LMX differen-tiation and workplace deviance, in that (1) out-group children are more likely toperceive parental altruism as an entitlement or as parental coercion, thus increasingthe likelihood an out-group child will engage in deviant behavior, and (2) in-groupchildren are more likely to perceive parental altruism as a further expression ofparental support, thus decreasing the likelihood an in-group child will engage indeviant behavior.

Discussion

This article integrates recent developments in family business research with existingorganizational behavior theories to demonstrate the great potential family firms offer toextend current leadership theories Because about 80% of all businesses are family firms


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with 2.7 million family businesses started each year (Chua, Chrisman, & Chang, 2004),understanding factors that increase family members propensity to behave deviantly iscrucial since employee deviance costs businesses billions of dollars each year. Theapplication of LMX theory to family firms adds to the emerging literature on the impactof LMX differentiation on organizational behavior (Henderson et al., 2009) and highlightshow leadership theories may need to be adjusted when applied to family firms so as to takeinto account complex family relationships.

Much of the current family firm research implicitly assumes PCRs in the family firmare invariant. We propose that very different PCRs can exist in the same family and theserelationships influence LMX differentiation. Formation of child ingroups and outgroupsshapes the likelihood that some children engage in deviant behavior. These effects arefurther strengthened by differing perceptions of parental altruism, leading to a viciouscircle of behavior by out-group children and a contrasting virtuous circle by in-groupchildren. Our model highlights how behavior in family firms differs from nonfamily firmsdue to the impact of family relationships. Although a connection between LMX anddeviance is expected to occur in nonfamily firms, parental altruism can affect that rela-tionship in ways not seen in nonfamily firms or among nonfamily employees of a family

firm. Thus, a link between LMX and deviance may be more prevalent and pronounced infamily firms than in nonfamily firms.

Interesting avenues for family firm research go beyond the effects of LMX differen-tiation on family members deviance to consider how family dynamics might impact theattitudes and behaviors of nonfamily employees working in family businesses. Squabblingbetween in-group and out-group children could pressure nonfamily employees to choosesides resulting in additional dysfunctional activity in the firm. Further, parental altruismcan make a family firm leader less willing to offer promotions and rewards to nonfamilyemployees (Lubatkin et al., 2005) causing these employees to question fairness and justicewithin the family firm. Nonfamily employees lack of status in the family system could

contribute to strong in-groupout-group perceptions that lead them to perceive unfairtreatment and to categorize themselves as out-group members (Barnett & Kellermanns,2006). When employees sense unfair treatment and injustice they are less likely todemonstrate extra-role behaviors and organizational commitment (Barnett & Keller-manns), and more likely to participate in workplace deviance (Judge et al., 2006; Robin-son & Bennett, 1997). Given research on deviance in nonfamily firms, nonfamilyemployees who see themselves as out-group members may be inclined to file grievancesagainst the business (Scandura, 1999) and to leave their jobs (Graen, Liden, & Hoel,1982).

Conversely, if a parent/leader includes nonfamily employees in the ingroup, out-group

children may feel further displacement and alienation sparking deviant behavior at work.In such a scenario, the out-group child may seek retributive retaliation whereby s/he aimsto punish or damage the offending parent. Retributive retaliation is a common way for awronged person to restore his/her dignity and sense of balance (McLean Parks, 1997).Therefore, the complexity of family firms provides much opportunity for investigating thedevelopment of ingroups and outgroups, the outcomes associated with the interplayamong in-group and out-group members, and how the consequences of LMX may vary infamily and nonfamily firms.

Another critical issue that deserves further consideration is the reciprocal nature ofPCR and LMX. Actions that occur within the context of the firm can serve to change a

childs ongoing relationship with a parent. It is possible over time that the child may movefrom out-group to in-group status, favored to non-favored relationship and vice versa.Case studies of family conflict (Gordon & Nicholson 2008) support such movement and


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indicate the work relationship can impact the personal relationship, just as the personalrelationship carries over into work.

It is a difficult challenge to suggest a means to break the vicious circle of behaviorfor out-group children and how such a vicious circle might impact the virtuous circle forin-group children. As parents treat their children differently as they grow, it is clear thistreatment has ongoing effects on the childs behavior (Richmond, Stocker, & Rienks,2005). Whereas we can only speculate on the linkage between such differential treatment

and its effects on a childs interest in becoming part of a family business, we proposethat the parent eventually will draw on the relationship with the child, the childs level ofcompetence, and the current situation to establish either a high-quality (ingroup) orlow-quality (outgroup) exchange relationship as the child enters the family business. Theparent should be aware of how this exchange relationship develops; the role that altruismplays in exacerbating or attenuating the effects of the relationship; and the implications forsubsequent problems such as withholding effort, theft, aggressive behavior, and/or abuseof company funds. It may be a proper strategy for the owner to avoid some of thesedifficulties by recognizing weaker PCR or out-group LMX and heading off trouble byarranging a childs early exit from or involvement in the firm. Conversely, if a parent

chooses to keep an out-group child employed in the firm, the parent may want to take stepsto increase the childs perception of insider status, strengthening the childs bond to thefamily firm. For example, delegation (Bauer & Green, 1996) and perceived support(Stamper & Masterson, 2002) are expected to strengthen a subordinates perception oftheir LMX.

Although our model focuses on deviance, it also suggests why some family membersbecome strong stewards of their firms and how family membership may be a competitiveadvantage for family firms. The virtuous circle of altruism builds strong commitment andthwarts opportunism in that some family members go above and beyond to help the firm,building on in-group status and reciprocal altruism with their parents. In addition, when

in-group and out-group children operate closely in the same family firm, the in-groupmembers may further refrain from deviant behavior toward the firm because they feelcompelled to compensate for the transgressions of their sibling(s). Driven by their status,visibility of their actions and desire for collective success of the family firm, in-groupmembers would be drawn toward a stewardship role as out-group members are drawn toa more deviant role. At some point, in-group members may become upset with out-groupmember deviance or the altruism displayed toward out-group members, but it would be anempirical question as to when this leads to in-group member deviance rather than com-pensatory activities to offset the deviants nefarious actions.

Additionally, future research should investigate whether stewardship behaviors can

compensate for the costs resulting from a family members deviance. A study by Dunlopand Lee (2004) revealed that organizational citizenship behaviors fail to compensate forthe low firm performance attributed to workplace deviance. Does a similar effect result infamily firms? Or, are family members better able to negate the costs of a family membersdeviant behavior due to incentives associated with the family bond, forgiveness, or guilt?Such studies would help answer the call for research to consider organizational-leveloutcomes of LMX differentiation and how LMX differentiation affects relationshipsamong subordinates (Henderson et al., 2009).

Whereas the model advanced in this article provides a framework to study deviance inthe family firm, the next step is to develop hypotheses based on the propositions offered

in this article and test them in a sample of family businesses to determine the formationof in-group and out-group relations and their connection to deviant behavior. Becausefamily business entrepreneurs are unique in that they seek to build businesses that are


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also family institutions (Chrisman, Chua, & Steier, 2003, p. 442), understanding how adecision to employ family members may hurt a business is important. In the model, we donot differentiate among types of deviance; further refinement based on empirical researchmay find varying links between antecedent variables and more serious types of deviantbehaviors, e.g., theft and aggression, and less serious, yet damaging, types such aswithholding effort and badmouthing.

Empirical studies in this area will be difficult because researchers must develop a high

level of trust with parents and children so as to obtain data regarding family relationships.In addition, research outside the family business setting indicates high disagreement onhow parents and their adult children view relationships, with parents more prone to reportgreater relationship quality than their children (Shapiro, 2004). It is also likely mostparents would be reluctant to admit they have different quality relationships with eachchild so the childrens reports would be important. Yet, the children would be less likelyto report engaging in deviance so alternative sources to obtain that information would berequired. Finally, in the family firm, there may be different fatherchild and motherchildexchange relationships, and there may be different relationships regarding other familymembers in the firm, such as nieces, nephews, and cousins.

Clearly defined ingroups and outgroups among siblings create tension in many familyfirms. In some family firms, toxic PCRs can lead all children to assume out-group status,whereas in other firms all children may see themselves as in-group members. In situationswhere all family members are part of a tightly knit ingroup, members may develop highcohesiveness leading to groupthink (Janis, 1972). This may result not in a violation offamily firm norms but to setting of firm norms that may conflict with societal norms, i.e.,hypernorms (Warren, 2003). Thus, there may be less violation of firm standards and moreviolation of societal standards. Exemplified by the fraudulent actions of Rigas familymembers and Adelphia Communications (Kidwell, 2009), this would be a ripe area forfuture research.

In conclusion, given that only 30% of family firms make it to the second generationand research suggests that PCRs can lead to problems in family firms (i.e., Chrisman et al.,2004; Schulze et al., 2001), understanding how parents encourage children to act devi-antly in the firm is important. Rather than focusing on the childs personality as the causeof deviance, we focus on family relationships. Thus, this model can encourage parents toexamine how interactions with children lead to workplace deviance and understand howthe distinction between ingroups and outgroups can damage the family firm.

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Kimberly A. Eddleston is an associate professor and Tarica-Edwards Research Fellow at the College ofBusiness Administration, Northeastern University, Boston, MA, USA.

Roland E. Kidwell is an associate professor at the Department of Management and Marketing, College ofBusiness, University of Wyoming, Laramie, WY, USA.

We are grateful to James Chrisman and the anonymous reviewers for their guidance. We also wish to thankFranz Kellermanns and Robert Liden for their helpful comments on earlier drafts of this article. We thankAllison Pearson for her suggestions and encouragement in developing our initial ideas. An earlier version ofthis article received the Honorable Mention Award at the Family Enterprise Research Conference, April 2007.


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parent–child relationships

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