Family Involvement in Middle Management and Its Impact on the Labor Productivity of Family Firms
Résumé
Family business owners and researchers tend to overwhelmingly focus on the
top-level structure of firms but ignore the middle-level practice – involving family
members in the middle-management team. Compared to top managers at the strategic
apex, middle-level managers are mainly responsible for internal operations and control,
and the composition of the middle-management team has an immediate and direct
impact on the overall workforce efficiency of family firms. Integrating agency theory and
organizational justice perspective, we proposed that family involvement in middle
management would have a negative impact on the labor productivity of family firms. We
further corroborated this effect by identifying three boundary conditions at the individual
(i.e., familial CEO), organizational (i.e., firm size), and regional (i.e., labor mobility) levels.
Using a sample of 1,284 privately owned family firms in China, we found that family
involvement in middle management, measured as the percentage of familial middle-level
managers, was negatively associated with labor productivity. Furthermore, this negative
relationship existed only when the CEO is a family member rather than a professional
manager, when the size of the firm is large rather than small, or when the firm is located
in regions with low rather than high labor mobility. These findings contribute to family
business literature and provide practical implications for human resource management in
family firms.