The Influence of Supervisors on Employee Performance in Family Firms

[We’re pleased to welcome authors Benjamin D. McLarty, James M. Vardaman, and Tim Barnett of Mississippi State University. They recently published an article in Entrepreneurship Theory and Practice entitled “Congruence in Exchange: The Influence of Supervisors on Employee Performance in Family Firms,” which is currently free to read for a limited time. Below, they briefly describe the motivation and impact of their research]

Research on family firms predominantly takes place at the firm-level. Findings suggest that family firms prioritize specific non-economic goals labeled socio-emotional wealth, and that emphasizing socio-emotional wealth drives many strategic decisions in family firms. We were motivated to pursue this research because, although we knew socio-emotional wealth affects how family firms behave, we wanted to know how people in family firms behaved. Specifically, we wanted to explore how the importance that supervisors placed on socio-emotional wealth could impact their employees’ job performance as well as employees’ commitment to the family firm. Here, we reasoned that employees could perceive their supervisors differently based on whether they were a member of the family firm, and if they embraced the firm’s socio-emotional wealth goals. When these factors were in congruence, we surmised that employees would translate their commitment to the family firm into greater job performance (both task and citizenship behavior). When they perceived a lack of congruence in their supervisor, we argue that decreased performance would occur based on a reduced sense of genuineness in the social exchange relationship with their supervisor. Our results supported our hypothesizing and demonstrate that employees seek supervisors in family firms who accurately represent their true interests—i.e., if they are family members they should support the family’s goals, if they are not, they should not.

Our research is innovative in that we take a multi-pronged approach and test a three-way interaction to determine how performance will be impacted by commitment, supervisor familial status, and socio-emotional wealth importance all in concert. Testing three-ways effects is less common in family firm research and provides a unique means for understanding how these factors influence the family firm.

We hope that our work encourages future researchers to continue to find ways to examine other factors at the individual level that influences family firm outcomes. Only through the continued pursuit of future research at multiple levels within the family firm can we come to a better understanding of why the family firm is the unique environment that it is.

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