8 October 2019

Research pick: Keep it in the family - "The family firm as an arena for white-collar crime"

Family firms are as old as “Mom and Pop”. But, there can be problems within such organisations and, according to research published in the International Journal of Business Continuity and Risk Management, specific personal motives, organisational opportunities and deviant behaviour can lead to white-collar crime. Indeed, there are plenty of opportunities, the research suggests, for family members to defraud their own firm, and thus their fellow family members.

Petter Gottschalk and Cecilie Asting of the Department of Leadership and Organizational Behavior, at the BI Norwegian Business School, in Oslo, Norway, do not argue that white-collar crime is any more or less frequent in family firms than it is in “normal” companies. However, their evidence suggests that it can be easier for a family member within the organization to carry out subterfuge.

The pair offers several possible solutions to the problem of white-collar crime in the family firm. For instance, family members should not have voting rights and privileges that allow them to carry out actions without the usual checks and balances that would be in place in other types of company.

Moreover, there is also the obvious possibility of non-family members of the firm to defraud the business too, especially if remuneration and reward equity is lacking. The team suggests that non-family members of a family firm should expect fair pay and conditions and that they should be stimulated to identify with the business just as an employee of any other type of business might.

Gottschalk, P. and Asting, C. (2019) ‘The family firm as an arena for white-collar crime’, Int. J. Business Continuity and Risk Management, Vol. 9, No. 4, pp.283–297.

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