Research by Peter Hom, Professor of Management and Entrepreneurship
Research by Luis Gomez-Mejia, Regents Professor of Management and Entrepreneurship
ny customer who walks into a family firm may be surprised at what they find,” reveals Luis Gomez-Mejia, ASU Regents Professor of management and entrepreneurship. With an overwhelming belief that non-family businesses offered more attractive career packages — either better human resources benefits or a well-defined career plan — Gomez-Mejia and colleagues Luiz Mesquita and Peter Hom, professors at ASU, Marcos Hashimoto, associate professor at the University of Indianapolis, and Amanda Christensen-Salem, assistant professor at the University of Cincinnati, decided to look closely at organizational caring climates in organizations, which highlight the belief that businesses do care about their employees.
In the debate between family firms and non-family firms, family firms offer a refreshing way of doing things, says Gomez-Mejia. “These workplaces are communities that continually encourage mutual help, respect, positive interpersonal relationships, trust, and support.”
Fueled by the concept of socioeconomic wealth (SEW) — described as the perceived value of noneconomic factors, such as family values, family dynasty, longevity, altruism, and transgenerational vision — defined by Gomez-Mejia in 2007, the authors discuss how firms strive to enhance their perception through organizational caring.
Preserving family SEW motivates how family firms drive their choices. “The image of the family is reflected in the company, and owning a family business can be a risk. They want to leave the dynasty intact for their children and grandchildren,” says Gomez-Mejia. “The company’s future is tied to the firm, which isn’t usually the case with non-family firms.”
Family values at the forefront
Family firms — defined as businesses where a family member governs or has a major influence — can be large corporations, small family operations, or anything between.
Some of the top companies in the world are family firms — including Marriott International, Motorola, Ford Motor Co., Harley-Davidson, Hilton Worldwide, and John Deere & Co. They represent a significant number of Fortune 500 firms and account for 90% of all businesses in both North America and most countries worldwide.
Mesquita worked for farm-machinery maker John Deere and found family concern at the forefront of his experience. “The company had a competitive corporate environment, but was also very friendly,” he recalls.
“During training, they showed us a picture of the garage where Mr. John Deere used to work. They highlighted his values, and I quickly learned that quality and service are cornerstones at John Deere,” he says.
Caring carries businesses to success
Mesquita was particularly motivated to dive into the research because of his personal experience with family firms. “My dad owned a prolific ranch. I will always remember how the employees were a part of a community,” he says. “It was the best place I could have ever asked to work — not only because we were a family but also because we understood each other. We had a common language,” reflects Mesquita.
Employees are more likely to perceive family firms as more human and less desirable than non-family firms. “Research shows that it’s less likely for people to quit in a family firm. More than that, employees stay for up to 20 years, compared with three or four years at non-family firms,” says Gomez-Mejia.
It’s true that family businesses aren’t perfect. “Fewer benefits or less compensation exist at family firms, but we are starting to see employees who value workplace intangibles rather than just the need to maximize profit,” he says.
Surveys uncover family firm culture
To uncover more about their research, including deciding whether family firms truly promote employee beliefs about organizational caring, the team collected data from two surveys at the Fundação Instituto de Administração (FIA), a nonprofit research institute in São Paulo, Brazil — the fifth-largest economy in the world.
The first survey, completed by key executives, assessed each firm’s human resource management practices and the second survey assessed a random sample of each firm’s employees who described their experiences working there.
The team endorsed a second measure of “perceived organizational caring”: Participants identified questions from the employee FIA survey that best captured “caring” by requesting the opinions of 15 renowned scholars who had theorized or studied organizational caring.
The team went on to recruit 336 Brazilian working professionals to complete separate survey items analyzing perceptions of caring with a large sample of Brazilian employees and firms. Further, they identified examples of caring within organizations within a large FIA sample of Brazilian employees and firms.
Impressive dataset differentiates research
Based on his earlier research, Gomez-Mejia and his team believe that employees in family firms, as compared with their counterparts in non-family firms, perceive greater workplace caring. “Because employees believe their employer cares about them, they are more engaged, and therefore more productive,” he says. “In family firms, this goes a step further. Employees seem to progress faster within the firm, and in turn, the firm benefits financially.”
Based on 54,000 employees from 180 firms from the FIA, the research team found that employees working for family firms do report higher perceptions of organizational caring. All-in-all, this translates into superior performance for both the firm and the employee.
— Madeline Sargent