The Role of Familial Trust in the Leader-member Exchange

Olga Štangej,Vida Škudienė

doi:10.15388/omee.2016.7.1.14215

Olga Štangej, Vida Škudienė

Open Access

https://doi.org/10.15388/omee.2016.7.1.14215

Copy DOI

Abstract

Drawing on the study of micro and small family businesses in a transition economy, this research explores the effects of trust transferred from the family to the business system. Specifically, it examines how the leader’s interpersonal trust in the member affects the quality of the leader-member exchange (LMX) in familial dyads. The results reveal that interpersonal trust has a positive effect on LMX and the degree of this association depends on the leader’s orientation. This relationship is strengthened by the leader’s orientation, however, only in the case when the orientation is family-centric. The moderating effect is not statistically significant when the leader adopts business-centric orientation.

Highlights

When formal markets are immature, nonmarket mechanisms, including kinship ties and family cohesion are especially significant ( James, 1999)
Reliance on family members is linked with interpersonal trust, defined as “the willingness of a party to be vulnerable to the actions of another party based on the expectation that the other will perform a particular action important to the trustor, irrespective of the ability to monitor or control that other party” (Mayer, Davis, & Schoorman, 1995, p. 712)
The findings of this study suggest that the leader’s degree of trust in the member has a positive effect on the quality of the leader-member exchange perceived by both the leader and the member in the dyad and this effect is subject to the leader’s orientation

Summary

Introduction

When formal markets are immature, nonmarket mechanisms, including kinship ties and family cohesion are especially significant ( James, 1999). Whereas families often are “high-trust” organizations, they enable family firms to develop family-based business relationships and unique context for trust (Sorenson, 2014). Trust can become a potential source of competitive advantage for a family business (Gersick, Davis, Hampton, & Lansberg, 1997), and a central component in family business social capital (Adler & Kwon, 2002; Aldrich & Cliff, 2003; James, 1999). Due to involvement of both family members and non-family employees in the business, the scope of trust in these organizations concerns interactions among all of these individuals, and as a result, extends to both family and employer-employee ( termed business) relationships and social exchange

Objectives

Methods

Discussion

Conclusion