For whom are family-owned firms good employers? An exploratory study of the turnover intentions of blue- and white-collar workers in family-owned and non-family-owned firms

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Abstract

This study investigates turnover intentions of different groups of non-family employees in family-owned firms and non-family-owned firms. Raising the question for whom are family-owned firms good employers, we add to the debate on their employer-qualities. Building on job embeddedness theory, we underline the importance of differentiating groups of non-family employees when analyzing their turnover intentions in the family and non-family business context. We focus on the differences among and between blue-collar workers and white-collar workers with and without leadership responsibility and find that turnover intentions of blue-collar workers with leadership responsibility are lower when they are employed in family-owned firms. We observe an opposing trend for white-collar workers with leadership responsibility, who show higher turnover intentions when they are employed in family-owned firms.

Introduction

The conditions for the development of turnover intentions of employees are different in family-owned firms as compared to non-family-owned firms (Khanin, Turel, & Mahto, 2012; Memili & Barnett, 2008; Sieger, Bernhard, & Frey, 2011). Working for a family-owned firm requires non-family employees to deal with two mutually dependent, but not entirely congruent, systems: The business system and the family system (Habbershon, Williams, & MacMillan, 2003; Tabor, Chrisman, Madison, & Vardaman, 2018). This dual taxonomy has ambiguous impacts on turnover intentions of non-family employees because it determines their job embeddedness. On the one hand, the dual taxonomy may enhance their retention through interpersonal links and informal exchanges between the family and the business system (Arregle, Hitt, Sirmon, & Very, 2007; Bammens, Notelaers, & van Gils, 2015; Pearson & Marler, 2010). On the other hand, executive entrenchment, idiosyncratic goals and justice imbalances in family-owned firms may lower their feelings of embeddedness and in turn foster their quit intentions (Barnett & Kellermanns, 2006; Tabor et al., 2018).

The ambiguity of family influence on employee relations is at the core of a conversation that Neckebrouck, Schulze, and Zellweger (2018) started by raising the question “Are family firms good employers?” (p. 1). However, this framework may be misleading, because it narrows any judgment on the employer qualities of family-owned businesses down to the two categories of good or bad. As such, it neglects contextual complexities and renders the analysis of employee relations in family and non-family-owned firms as two-dimensional. Moreover, it does not consider the influence of occupational specifics on the job embeddedness of employees. Neckebrouck et al. (2018) solely differentiate family from non-family employees. Most studies on employee relations in family-owned firms either apply a) a single broad category of employees (e.g., Kotey & Folker, 2007), b) the group of family employees (i.e., working family members) (e.g., Beehr, Drexler, & Faulkner, 1997; Khanin et al., 2012), or c), the above mentioned distinction between family and non-family employees (e.g., Pearson & Marler, 2010). The common flaw of these conceptualizations is that they do not consider that different groups of workers employed in the same firm are embedded differently and thus develop different turnover intentions (Hom, Mitchell, Lee, & Griffeth, 2012; Iverson & Roy, 1994; Pond & Geyer, 1991).

However, just like not organizations are alike, non-family employees need to be conceptualized as a heterogeneous group, too. The human resource management (HRM) literature has demonstrated that the determinants of the turnover intentions of blue-collar workers (i.e., manual workers, wage earners) and white-collar workers (i.e., non-manual workers, salary earners) (Statisches Bundesamt, 2013) differ greatly (Toppinen‐Tanner, Kalimo, & Mutanen, 2002). Moreover, a particularly strong HR tool to retain valuable employees is empowerment through the assignment of leadership responsibility (Andries & Czarnitzki, 2014; Mumford, Campion, & Morgeson, 2007; von Rueden & van Vugt, 2015). Its embedding effect differs across groups of employees (Wittekind, Raeder, & Grote, 2010).

With these considerations, we suggest a modification of Neckebrouck et al. (2018) question to “For whom are family-owned firms good employers?”. In combination with our knowledge on varying turnover drivers, we propose that leadership responsibility will have different effects on blue- and white-collar workers across family- and non-family-owned firms. We explore the moderating effects of blue-collar rank and leadership responsibility on the relationship between the family business context and turnover intentions from a contingency perspective. Building on job embeddedness theory and in line with previous turnover research, we argue that occupational characteristics and the organizational context influence the degree of job embeddedness and in turn impact turnover intentions (Lee & Mitchell, 1994; Mitchell, Holtom, Lee, Sablynski, & Erez, 2001; Vardaman, Taylor, Allen, Gondo, & Amis, 2015).

Our study contributes to the management literature and the family business literature in several ways. First, we add to a better understanding of differences in the quality of employee relations in family- and non-family-owned firms (Barnett & Kellermanns, 2006; Sharma, 2004). So far, research findings on employee outcomes across family- and non-family-owned firms are limited to aggregate levels (Mitchell, Morse, & Sharma, 2003; Tabor et al., 2018). Distinguishing between blue- and white-collar rank with and without leadership responsibility introduces a new, more fine-grained perspective to this discussion. It will help us to explain how and why turnover intentions of employees develop differently in family than in non-family-owned firms.

Second, we offer novel explanations for the divergent nature of research findings on employee relations in family-owned firms. Contrasting views may be partially due to differences between employees of different occupational ranks and leadership responsibilities (Ellis, 2016; Iverson & Roy, 1994). Incorporating such differences will add to research on employee relations in family- and non-family-owned firms and allow for refined interpretations.

Third, our study has important implications for practitioners. The lack of insights into the internal (i.e., differences across occupational ranks within family-owned firms) and the external (i.e., differences between employees of family- and non-family-owned firms across ranks) perspectives on turnover intentions confines the scope of inferences family managers may draw to design retention strategies to an aggregate level. Deeper knowledge about the determinants of turnover intentions across occupational ranks and degrees of leadership responsibility is important because management control over structural conditions of the working context differs across those categories (Iverson & Roy, 1994). A more thorough understanding of the contingency of turnover intentions of non-family employees will help to tailor retention strategies that are more sensitive to differences among the heterogeneous group of employees. This may help to save substantial employee turnover costs like the loss of non-transferable intrinsic knowledge and replacement costs (Mitchell, Holtom, & Lee, 2001).

Section snippets

Literature review and hypothesis development

With their peculiar corporate culture and hybrid nature (Donckels & Frohlich, 1991; Habbershon et al., 2003), family-owned firms represent a unique environment for employee relations and the development of turnover intentions (Barnett, Memili, Memili, & Barnett, 2008; Khanin et al., 2012). This uniqueness can be illustrated at the hands of job embeddedness theory. According to this theory, employees develop informal and formal “links” that potentially increase perceived “fit” with the firm.

Method

Fig. 1 depicts our research model with the three-way moderation of the relationship between family-owned status and turnover intentions through the moderators leadership responsibility and blue-collar rank.

Results

Means, standard deviations, and Pearson’s correlations of all of our variables are reported in Table 1.

We apply hierarchical ordinary least squares (OLS) regression analysis to investigate turnover intentions of blue- and white-collar workers with and without leadership responsibilities in family- and non-family-owned firms. We perform our calculations with standardized values for all variables to rule out possibilities of heteroscedasticity or spatial correlation (Pindyck & Rubinfeld, 1998).

Discussion

The results of our study underline the importance to carefully orchestrate organizational and occupational contextual factors while investigating turnover intentions of employees. From a very general perspective, we did not find support for Hypothesis 1, i.e., a significant negative relationship between family-owned status and turnover intentions of employees. This non-finding is indicative for the importance of contingencies and is especially telling when a more differentiated perspective on

Limitations and future research

As with any empirical study, the analyses presented in this paper face some limitations. First, our study was conducted with data on German firms. While previous research has emphasized the special importance of family businesses to the German economy, making Germany a particularly relevant context for investigation (Hauswald et al., 2016; Klein, 2000), our analyses might be subject to cultural bias (Sieger et al., 2011). Germany is a showcase for a highly developed country with an increasingly

Conclusion

In this paper, we raised the question “For whom are family-owned firms good employers?”. Our study highlights differences in turnover intentions among and between blue- and white-collar workers, with and without leadership responsibility, employed in family- and non-family-owned firms. Our findings support turnover studies that postulate different job-related aspects do not mean the same thing for all employees alike, which reflects in differences in turnover intentions. These insights help to

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