What Goes around Comes around, Descendants Harm the Family Firm following Perceived Injustice

A pitfall in succession is the just allocation of the family business to the descendants. Very often children perceive incumbents’ decision regarding ownership and management transfer as unfair. Some believe to be under-rewarded, others over-rewarded. This paper deals with the consequences of injustice perceived by descendants in succession, on the family firm. Findings suggest that not only the family relations suffer but that the family firm becomes target of so called injustice reduction mechanisms, behaviors of descendants designed to restore justice, that have predominantly detrimental effects on the business. Based on survey responses of 1’258 respondents I quantitatively investigate the occurrence of these injustice reduction mechanisms. Under- rewarded descendants are expected to feel anger and envy and show behaviors such as less work effort and shirking, free-riding, resistance to change, or legal-claiming. Contrary, perceived injustice is expected to lead the over-rewarded to feel guilty and to result in the following behaviors: more work effort, less satisfaction, salary increase for the under-rewarded and a toleration of less work quality of the under-rewarded. I further test moderating effects of family cohesion. The paper aims to contribute to family business succession, governance and organizational justice literature.