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The Ability and Willingness of Family Firms to Bribe: A Socioemotional Wealth Perspective

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Abstract

Extant research concludes that family firms are less likely to bribe due to reputation concerns. However, such conclusions are, to a certain extent, inconsistent with the intuition and observation that some family firms can be aggressive bribers. This study employs a restricted-extended framework of socioemotional wealth model to reconcile this inconsistency. We propose family management, on the one hand, results in reputation preservation willingness; while on the other hand, results in an abuse of trust between family members and superior ability to hide bribery secrets. Integrating the willingness and ability mechanisms leads to an inverted U-shaped relationship between family management and bribery. Further, family firm political connection and province-level anti-corruption investigation play moderation role on the inverted U-shaped main effect. An empirical analysis of Chinese listed firms from 2006 to 2017 supports our hypotheses.

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Notes

  1. Corporate bribery can occur with or without the involvement of government officials (Castro et al., 2020). Put differently, government officials are not the only ones demanding the bribe. While studying bribery decision-making without the involvement of government officials is interesting, this study focuses only on those involving government officials.

  2. While the central government is aware of these practices, proving that a particular expenditure is illegal is close to impossible because in China, a norm to do business transactions in cash still exists (Cai et al., 2011).

  3. Firm-specific corruption investigation is not required for our theorization. What we mean to theorize is how family firms make bribery decisions before they are actually targeted for any corruption investigation. In this sense, using provincial corruption investigation to measure anti-corruption investigation is appropriate.

  4. Nevertheless, as a reviewer correctly points out, this quasi-experiment is also an “indirect and distal” design, yet such “triangulation” effort gives us more confidence in our measurement of bribery.

  5. We have also collected additional qualitative data to dig deep through several interviews. We ask: “is there a situation where a family member holds a TMT position but is not involved in actual management?” One family executive in a listed Chinese family firm described the unique way of management in family firms: “Family members can participate in management in various ways. Apart from daily management work, much informal management work can also be performed. For example, when having family dinners, family members discuss management issues and make decisions. Especially at year-end parties, major management problems will be discussed, communicated, and resolved among family members. So, personally, I do not think the situation you mentioned exists in reality. The thing is that the way of management may be different in family firms.” These interviews provide some evidence that, at least from executives’ perspective, the measurement of family management is appropriate.

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  1. School of Economics and Management, Wuhan University, No. 299 Bayi Road, Wuchang District, Wuhan, Hubei Province, China

    Shisong Jiang

  2. Guanghua School of Management, Peking University, No. 5 Yiheyuan road, Haidian District, Beijing, China

    Yijie Min

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Jiang, S., Min, Y. The Ability and Willingness of Family Firms to Bribe: A Socioemotional Wealth Perspective. J Bus Ethics 184, 237–254 (2023). https://doi.org/10.1007/s10551-022-05086-1

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