Examining Bifurcation Bias and Its Possible Consequences for Family Firm Competitiveness

Abstract

Due to their fundamentally different statuses as “family employees” and “non-family employees” many employees experience biased human resource (HR) practices in family firms. Verbeke and Kano (2012) define this phenomenon as bifurcation bias and suggest that such biased treatment is harmful to family firms and widespread. Since then, many studies have focused on bifurcation bias in family firms and especially on unequal HR practices towards non-family vs. family employees. However, bifurcation bias among family employees or relative to non-family employees has been ignored so far. Based on this research gap, my thesis focuses on the act of implementing biased HR practices against selected family members and defines it as “family-related bifurcation bias”. Furthermore, I define bifurcation bias toward non-family employees compared to family employees as "non-family-related bifurcation bias”. I develop a model of four contrasting types of family firms based on the different combinations of family and non-family-related bifurcation bias. Subsequently, building upon prior literature and my model, I discuss the implications of each family firm type and their relation to competitive advantage. While bifurcation bias has been regarded as harmful to family firm competitiveness, it is also indisputable that bifurcation bias is widely spread across many countries and cultures. One reason for its continued usage in many countries might be its potential to contribute to managing family firm human capital resources. By analyzing family and non-family-related bifurcation bias and its implications to the human resource pool of family firms, my study contributes to expanding the current understanding of bifurcation bias while giving valuable insights as to how discriminating practices can have positive or negative connotations to family firm competitiveness around the globe.