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IESE Business School

Abstract: This paper is a continuation of two earlier papers, "Ethics of Personal Behavior in Family Business (I)" (Gallo, 1999) and "Ethics of Personal Behavior in Family Business (II): Differences in Perceptions" (Gallo and Cappuyns, 1999). All three use data gathered from a questionnaire sent in 1998 to a population of 1,800 owners and directors of Spanish family businesses, of which 253 valid copies (13%) were returned. Detailed study of the correlations between different types of behavior, combined with knowledge and experience of the way family businesses work, leads us, in the first part of this paper, to propose a classification of general personal behavior in family businesses into four groups. In the second part, cluster and factor analysis confirms and refines our classification, suggesting the following three types of unethical behavior in family business: 1) Using the company to further personal economic interests, 2) Acquiring power by fraudulent means and holding on to it by nepotism, manipulation, and resistance to change, 3) Running the company on the basis of personal preferences, without allowing others to intervene. Our research also reveals the existence of a fourth, very important, type of behavior that is common in family firms, particularly in those that grow and develop, making a successful transition to the second and later generations. We have classified this type of behavior as: Ethical best practice in business.

Keywords: Ethics; family business; behavior

29 pages, November 10, 1999

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