Creating Social Reciprocity – The Role of Trust Network Reproduction and Social Learning: Evidence from a Medium-Sized Family Firm in Germany

This research introduces a framework for explaining why managing family members create a shared understanding of caring and being cared for with their nonfamily employees, called ‘Social Reciprocity’. Applying an embedded case study design, using grounded theory method, this research adds to the understanding of the social mechanisms of internal stakeholder management in family firms, which have been largely ignored. The emergent framework proposes that the ability of family members to build trusting relationships with employees, based on cognitive and affective trusts contributes to the creation of social reciprocity. Affective trust, in particular, has a direct and moderating role in the creation of social reciprocity on emotional and instrumental level. The moderating role of affective trust is considered a valuable finding; since it emphasizes the role of trust as a meta theoretical concept. The developed framework suggests that affective trust initiates a social learning process that leads to a positive attribution bias, i.e. an automatic positive attribution of managing family members’ actions as being based in benevolence and genuine care. Furthermore, social learning in the form of trust network reproduction emerges as contributory to the diffusion of social reciprocity to lower hierarchical levels. Analysis of data demonstrates that employees with little direct interactions with managing family members develop trusted weak ties to managing family members, with similar levels of cognitive and affective trust. This finding is particularly valuable as it challenges traditional network theory, which argues for frequent personal interaction to be necessary in creating trust ties. This thesis contributes to theoretical and methodological knowledge in several ways. First, it advances understanding of the social dynamics and mechanisms of internal stakeholder engagement in and SME family firm context. Second, the developed framework demonstrates the importance that concepts form multiple disciplines such as psychology, social psychology and sociology have on the development of theories in management research. Third, trust network reproduction and upper network stability emerged as causal mechanisms of potentially meta theoretical value that may have applicability on a wider range of topics in management research. Lastly, this thesis demonstrates the value of grounded theory in developing theory in management research.