The future of a family medical practice is threatened due to theft and insurance fraud committed by the owner’s family member. Though the family member had a history of being involved in illegal activities, the owner trusted the family member and gave him what he hoped would be an opportunity for a fresh beginning. The case represents a true “Fredo Effect”, and counters the popular belief that trust can be assumed among family members within a business in a way that it cannot among nonfamily members. Furthermore, the case shows the potential blind spot that can develop when the history of previous family relationships impacts family firm owners’ decision-making, and subsequently the firm and the family itself. This case study takes readers inside the complicated web of family loyalty, family business stewardship, and professional responsibility to explore how deviance can emerge within family firms and how owners can respond accordingly.
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