Particularistic and system trust in family businesses: The role of family influence

Abstract

Research on how trust develops and why it matters in family businesses is in development. Our study investigates the emergence and the evolution of trust in family business leaders. Drawing on the New Systems Theory, we also examine the impact of family influence on trust. Multiple semi-structured interviews were performed in three Chinese family businesses. Results suggest that relationship-based particularistic trust prevails at the start-up stage because of the void of governance mechanisms. As businesses grow, particularistic trust gradually gives way to institution-based system trust. Evidence further indicates high family influence catalyzes particularistic trust initially and restricts system trust subsequently.