Innovation, Growth, and Succession in Asian Family Enterprises
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Innovation, Growth, and Succession in Asian Family Enterprises

Edited by Hung-bin Ding, Hsi-Mei Chung, Andy Yu and Phillip H. Phan

The scope and depth of family business research have been quickly expanding in the last two decades. The editors and contributors to this book present eight recent studies examining the impact of external or internal family conditions on the innovation, growth, and succession of family firms in Asia.
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Chapter 9: Bifurcation bias and family compensation: The case of Dawu Group

Feihu Zheng and Hung-bin Ding

Abstract

The bifurcation bias refers to the asymmetric treatment between two groups. In the context of family firms, the bifurcation bias often refers to a behavioral pattern to the family and non-family employees (Verbeke and Kano, 2012; Daspit, Madison, Barnett, Long, 2018). The presence of bifurcation bias motivates non-family employees to seek opportunistic behaviors against the owners of the family firms therefore creates principal-agent problems in these organizations (Verbeke and Kano, 2012). A common approach to achieve this objective is to reduce or to de-emphasize the family influence of the business by promoting professionalism. While this approach addressed the negative effect of agency problems, it dilutes the role of family in the family firms. In this research we proposed balanced perspective in which the bifurcation bias and professionalism are able to coexist. Based on an extensive case analysis, we argue that the family firms are able to minimize bifurcation bias thus de-motivating opportunistic behaviors while keeping the family relevant in business operations and decision-making.

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