The Best of Firms, the Worst of Firms: Ethical Bifurcation in Family Businesses During Crises

Despite the ample progress being made in the study of family business ethicality, there remains a lack of consensus in the findings and some ambiguity concerning the concept. Building on a modified socioemotional wealth perspective, we theorize why family firms are likely to manifest both exceptionally ethical and equally unethical behavior during crises. We argue this to be caused by the close socioemotional connection between family owners and their firms, the decision-making discretion afforded these owners, and the secrecy and privacy with which they can act. We extend our framework to multiple stakeholders – employees, customers, and local, national, and global communities, and provide positive and negative examples as firms confront specific economic, human, and natural crises – demanding situations that reveal authentic ethicality when the pressure is on. We also introduce the notions of ethical heterogeneity, focus and coverage, and their moderators, arguing that the same family and firm may exhibit both ethical and unethical behavior depending on the crisis and stakeholders concerned. Propositions are provided throughout, and research implications are drawn.