Laissez-faire leadership, trust in subordinates and problem-solving conflict management: A multigroup analysis across family and non-family businesses

Abstract

Laissez faire leadership (LFL) has been linked to non-constructive approaches to conflict management, yet if and how LFL can explain the use of more constructive approaches (e.g., problem-solving) has not been studied. This is surprising given that trust in subordinates is characteristic of LFL, which is also key to cooperative relationships where the use of problem-solving is involved. Furthermore, compared to non-family businesses (NFBs), the socioemotional wealth that governs family businesses' (FBs) decision-making should make LFL, the trust placed in subordinates and the use of problem-solving more likely among the latter. In this study, we compare the use of LFL in FBs versus NFBs and analyze whether trust in subordinates lies behind a positive link between LFL and the use of this approach, and whether the distinctive socioemotional wealth of FBs accounts for differences in this relationship. Using a sample of 326 general managers of small and medium-sized enterprises (SMEs) in Ecuador, two complementary methods, partial least squares (PLS) and fuzzy-set qualitative comparative analysis (fs/QCA), yielded robust findings. As expected, differences in the strength of this relationship were found across FBs and NFBs, with LFL and both affective and cognitive trust being critical for the use of problem-solving in FBs but with cognitive trust playing this principal role in NFBs. Our findings link the largely separate FB literature on leadership and conflict management.