Family tree intertwined with a business structure, representing the balance between family values and business goals.

Family Business Crossroads: Balancing Justice and Fairness for a Thriving Workplace

Nico Varela in Business & Economy August 2025 • 4 min read.

"Navigate the complexities of ethical leadership in family businesses by understanding how to align justice, fairness, and socioemotional wealth for a harmonious and productive environment."

In the world of business ethics, fairness stands as a guiding light, an ethical principle that shapes the way organizations treat their people. It encompasses justice, equity, and impartiality, motivating individuals to act fairly through equality, reciprocity, and optimization. However, the concept of fairness in organizations has always been a concern of management thinkers. In today's dynamic business environment, businesses should always be concerned with fairness.

However, the traditional view of justice and fairness often assumes that all employees share a similar frame of reference. This overlooks the influence of pre-conceived expectations, emotions, and family dynamics on ethical perceptions and fairness judgments. Justice refers to the adherence to rules of conduct, while fairness reflects subjective perceptions of whether those rules are ethical and fair.

Family businesses, which make up a large portion of enterprises worldwide, often face unique challenges in balancing justice and fairness. In these organizations, family and business are intertwined, which greatly influences how the business is managed. Controlling owners pursue both economic and socioemotional goals, which can create conflict when rules designed to reward economic contributions clash with employees' perceptions of fairness.

Understanding the Nuances of Justice and Fairness in Family Businesses

Family tree intertwined with a business structure, representing the balance between family values and business goals.

Justice and fairness are distinct ethical norms that play a critical role in shaping the workplace environment. Justice is the strict adherence to rules of conduct, while fairness is the subjective moral evaluation of those rules. In other words, justice is about following the rules, while fairness is about whether those rules are perceived as ethical and equitable.

In family businesses, the pursuit of socioemotional goals adds a layer of complexity to the concepts of justice and fairness. Socioemotional goals are the family-centered non-economic objectives that family firms strive to achieve, such as preserving family control and influence, strengthening family bonds, and fostering emotional connections to the business. These goals can sometimes clash with utilitarian principles of justice, which prioritize economic efficiency and impartiality.

Informal Rules: Family firms often operate with informal rules and norms that shape employees' perceptions of fairness.
Multiple Reference Points: When evaluating ethical norms for family employees, merit is not the only consideration. Controlling owners and family employees also consider need and equality when making fairness judgments.
Distinct Skill Sets: Family and non-family employees may bring unique skill sets to the business. Achieving fairness between them, in the sense of meeting their subjective moral expectations, can be challenging.

In conventional business ethics, utilitarian justice serves as a foundational principle, which often leads to practices that show favoritism or discrimination being deemed unfair. This judgment assumes that family members are simply employees or managers and that family ties affecting business practices create a strong possibility of unfairness. However, the assumption that family-owned and controlled businesses should be professionalized and practices favoring family employees are automatically unfair should be approached with skepticism.

Building an Ethical Family Business: A Call to Action

The complexities of justice and fairness in family businesses require a more nuanced approach. By openly communicating the family firm's socioemotional goals and incorporating them into the fair process, businesses can build and maintain an ethical workplace where justice and fairness are prevalent. This requires a shift from traditional professionalization processes to practices that recognize the unique dynamics and values of family-owned enterprises.

About this Article -

This article was crafted using a human-AI hybrid and collaborative approach. AI assisted our team with initial drafting, research insights, identifying key questions, and image generation. Our human editors guided topic selection, defined the angle, structured the content, ensured factual accuracy and relevance, refined the tone, and conducted thorough editing to deliver helpful, high-quality information.See our About page for more information.

This article is based on research published under:

DOI-LINK: 10.1111/beer.12209, Alternate LINK

Title: Justice Versus Fairness In The Family Business Workplace: A Socioemotional Wealth Approach

Subject: Economics and Econometrics

Journal: Business Ethics: A European Review

Publisher: Wiley

Authors: Georges Samara, Karen Paul

Published: 2018-10-23

Everything You Need To Know

What are the key differences between 'justice' and 'fairness' within a family business context?

In a family business, 'justice' refers to the adherence to established rules of conduct, ensuring that everyone follows the same standards. 'Fairness,' however, is a more subjective evaluation of whether those rules are ethical and equitable. It's about how the rules are perceived by those affected by them, taking into account individual circumstances, emotions, and expectations. Failing to reconcile the difference can lead to perceptions of bias and unfair treatment, ultimately impacting employee morale and productivity.

Why are socioemotional goals important in family businesses, and how can they affect perceptions of fairness?

Socioemotional goals are non-economic objectives that family firms pursue, such as maintaining family control, strengthening family bonds, and fostering emotional connections to the business. These goals can influence decision-making and sometimes clash with principles of justice that prioritize economic efficiency. For example, favoring a family member for a promotion might be seen as unfair by non-family employees if merit isn't the primary consideration. Open communication about these goals and their integration into fair processes is crucial for maintaining an ethical workplace.

What unique challenges do family businesses face when trying to balance justice and fairness, compared to non-family businesses?

Family businesses uniquely intertwine family dynamics with business operations, leading to complexities not typically found in non-family businesses. Controlling owners often pursue both economic and socioemotional goals, which can create conflicts. For example, rules designed to reward economic contributions might clash with employees' perceptions of fairness if family members are perceived as receiving preferential treatment. Additionally, informal rules and norms prevalent in family firms can shape fairness perceptions, adding another layer of complexity.

How can family businesses create a more ethical workplace by addressing the balance between justice and fairness?

Family businesses can foster a more ethical workplace by openly communicating the family firm's socioemotional goals and incorporating them into fair processes. This involves a shift from traditional professionalization processes to practices that recognize the unique dynamics and values of family-owned enterprises. It also requires considering multiple reference points beyond merit when evaluating ethical norms, including need and equality. By prioritizing transparency and inclusivity, family businesses can build trust and maintain a positive work environment.

What are the implications of ignoring the subjective perceptions of fairness among employees in a family business?

Ignoring the subjective perceptions of fairness can lead to several negative consequences. Non-family employees might feel undervalued or discriminated against, leading to decreased morale, reduced productivity, and higher turnover rates. This can ultimately damage the family business's reputation and hinder its ability to attract and retain talent. Furthermore, unresolved fairness issues can create conflict within the family itself, potentially jeopardizing long-term stability and success. By addressing these perceptions proactively, family businesses can mitigate these risks and foster a more harmonious and productive workplace.