The aim of this paper is to theorize on and empirically extend the understanding of the adoption of codes of ethics within the context of family firms. The authors contend that in family firms the adoption of code of ethics is a process emerging from social interaction.
Through a multiple case study design the authors analyze family firms that have not yet adopted a code of ethics and untangle the process that could potentially lead to that choice.
The authors’ main finding suggests that the institutional context impacts on the adoption of codes of ethics. Furthermore, in first generation the adoption of codes of ethics is hindered by the presence of the founder and the existence of strong family ties. In subsequent generations as founder centrality is reduced the owning-family considers more the possibility to adopt such codes to preserve the family's reputation in the local community.
First multiple views also from external stakeholders could be added; second, an international perspective using cross-country cases could add more nuances on how cultural and institutional aspects shape the adoption of codes of ethics differently across national contexts.
The authors’ findings inform family business owners on the importance of adopting code of ethics to support the formalization of the family value system.
The authors advance the debate on codes of ethics in family firms by disentangling the process through which those codes may be adopted to institutionalize and formalize the family values, history and tradition.
