Nurturing Defenders of the Family Firm

For family businesses, reputation is a multi-generational asset, one ferociously protected. When your family name is on the door, every customer complaint, negative review or whispered criticism at the local chamber meeting feels like a personal affront and attack on your legacy.

So when crisis threatens your family business, you need defenders. People who will push back on negative chatter and champion the company’s reputation in the community. The question is: Can you count on your employees to have your back?

If those employees have a family connection, then you can. When a business faces reputational threats, family employees instinctively defend the firm. They push back against critics and make it clear they will not tolerate attacks on the business.

Non-family employees? Despite years of service and genuine affection for their employer, they may not feel the same instinctive responsibility to defend the business. Without a family tie, they can hesitate to defend what is not legally “theirs.” And because they make up about 80 per cent of the family business workforce, that hesitation represents a lot of unused firepower.

The gap between how family and non-family employees feel about a family business is largely a reflection of psychological ownership, says Sarah Burrows, an assistant professor at Smith School of Business. Psychological ownership is the feeling that something is “mine” even when you don’t legally own it. At work, it’s the possessiveness and connection you feel toward your job, projects, workspace, or even the company itself. If any is threatened, your Mama Bear instincts kick in.

The feeling of ownership develops in three ways: through a sense of control, intimate knowledge and personal investment. Family employees have all three in spades. They often hold equity stakes (control), grow up hearing business strategy discussed at the dinner table (intimate knowledge), and tie their personal identity to the firm (investment). Many cannot remember a time when the family business was not part of their identity.

But non-family employees face barriers at every turn. Family owners typically guard strategic and financial control. Non-family staff do not have formative childhood experiences of learning the business. And while they may work hard and care deeply, their sense of self remains distinct from the company. 

Evoking a culture of stewardship

Psychological ownership, however, is not a fixed feeling. That got Burrows thinking that it could be nurtured to make non-family employees feel a greater sense of ownership in the family business — and be more willing to defend its reputation. 

“What really drew me to this topic was a desire to test the taken-for-granted assumption that ‘blood is thicker than water,’ that family employees will always be the most committed defenders of the firm,” Burrows says. “I was curious to see if the right culture could inspire those employees to defend the firm just as passionately as family members do when its reputation is on the line.”

Working with Craig Crossley and James Combs of the University of Central Florida and Catherine Faherty of Dublin City University, Burrows identified stewardship culture as a potential trigger to boost psychological ownership. Stewardship culture involves treating all employees as trusted partners rather than hired hands, she says.

Firms with strong stewardship cultures do several things consistently. They reduce the psychological distance between management and staff and engage employees in genuine decision making on issues that affect their work and the company’s direction. They delegate meaningfully. And they emphasize team success and company performance over individual achievement and internal competition. 

What the COVID crisis showed

Could a favourable stewardship culture boost the sense of ownership among non-family workers and turn them into advocates? Burrows and her colleagues tested their theory in a study involving CEOs and employees at 49 small and medium-sized Irish family businesses (under 350 employees). Data was collected in 2020, during the peak of the COVID-19 pandemic.

To measure stewardship culture, a key factor in the study, the researchers used a time-tested 18-item scale developed in 2017 that captures six dimensions: intrinsic motivation, organizational identification, use of power, collectivism, involvement orientation and power distance.

The study uncovered significant effects. In firms with weak stewardship cultures, non-family employees showed significantly less psychological ownership than family members — just as expected. But in firms with strong stewardship cultures, that gap disappeared entirely. Non-family employees felt just as much ownership as their family counterparts.

The real test came when Burrows looked at how employees behaved during a perceived reputational threat, exactly when family businesses need defenders most.

The COVID-19 pandemic provided an ideal natural experiment. Some of the Irish businesses in the study faced criticism for their pandemic response, whether related to safety protocols, employee treatment or business continuity decisions. Employees witnessed neighbours, friends and community members questioning their employer’s actions.

In firms with weak stewardship cultures, non-family employees largely stayed quiet when their employer faced criticism. “Those in less inclusive firms told us they felt ‘under-appreciated for the extra effort’ or that ‘the business didn’t fully live up to the values of respect and integrity’ during the COVID pandemic,” Burrows says.

By contrast, in firms with strong stewardship cultures, non-family employees defended the company as if it were their own. 

Boosting psychological ownership

The implications for family business owners are clear. If you want your entire workforce — not just family members — to defend the company’s reputation when it matters most, help them feel like psychological owners. That means:

Stop hoarding control. Maintaining family control matters. But non-family employees can be involved in operational decisions and strategic discussions without surrendering ownership. Doing so avoids alienating them and increases their commitment to protecting what you’ve built.

Be mindful of unspoken messaging. Overemphasizing family loyalty in internal messaging with phrases like, “We’re doing this for the family legacy,” can unintentionally exclude others, says Burrows. And unequal treatment, such as giving family members more flexibility or recognition, can quietly erode trust. 

Share knowledge freely. Family members grow up steeped in company lore. Recreate that for non-family employees through transparent communication, storytelling about company history and values, and inclusion in strategic conversations.

Create investment opportunities. If not actual equity, offer employees the chance to invest their identity and creativity. Let them shape projects, represent the business externally and contribute to its evolution.

Lead like a steward, not a sovereign. The research specifically points to stewardship culture — not individual stewardship behaviour — as key. This is not about what you do as business owner or executive; it is about the overall atmosphere created through consistent practices across the entire organization.

Unanswered questions

For Burrows, the study raises new questions that she hopes to pursue. For one, how are stewardship cultures built and maintained over time? Can they be sustained through the inevitable generational changes in family business leadership? “As ownership passes to the next generation or new managers step in,” she says, “practices that once made employees feel trusted and included can fade.” 

For now, Burrows has a message for family business owners mindful of their legacy. They need to remember, she says, that while legacy is often viewed as something passed within the family, it is actually carried forward by everyone who works there.

“The future of the family’s legacy rests not only on who inherits ownership, but on how many people feel they have a stake in defending and advancing it,” she says. “And because so many family businesses pride themselves on caring deeply for their people, our findings reinforce how central that care is — not only to employee well-being but to sustaining the reputation the family has worked so hard to build.”