The Dark Side of Family Embeddedness: Family Firms Engagement in Private-Sector Corruption

Abstract

This research analyzes how family embeddedness affects the decision of owners in charge of small entrepreneurial family firms operating in an emerging country to participate in private-sector corruption. Prior research has typically assumed that those in charge of family firms choose to participate in corruption to receive an immediate economic benefit. We challenge this assumption and argue that family influences the decision of the owner of small entrepreneurial family firms to participate in private-sector corruption driven by the pursuit of both short-term economic (profit maximization) and long-term non-economic goals, including attaining upper social class status (even if this decreases economic gains) for the family unit. We further find that in the context of an emerging market, trusted intermediaries can be seen as family members by the owners in charge of small entrepreneurial family firms and can influence them to participate in illicit activities. We also contend that those in charge of small entrepreneurial family businesses manage participation in private-sector corruption by dissociating and framing means.