An Examination of Nepotism Perceptions within Ugandan Family-Owned Enterprises ()
1. Introduction
Nepotism, the preferential treatment of relatives in professional settings regardless of merit, casts a complex shadow on family-owned businesses (Burhan, 2020) . While acknowledged as more prevalent in such enterprises than others (Chrisman, et al., 1998; Hustedde, et al., 2004) , its perception is not uniformly negative. Notably, Ford and McLaughlin (Ford & McLaughlin, 1999) highlight the potential benefits in smaller firms, including cost-effectiveness and seamless succession planning. Proponents further suggest that nepotism fosters a positive work environment due to familiarity and shared values (Dyer, 1986; Lansberg, 1999) . However, the potential for nepotism to undermine employee morale, productivity, and trust through favoritism and unfairness cannot be ignored (Chrisman et al., 1998; Gomez-Mejia et al., 2007) .
This inherent paradox is particularly relevant in developing nations like Uganda, where family businesses dominate the economic landscape, generating an estimated 90% of revenue (Insight, 2023) . While these enterprises contribute significantly to the economy, their struggle toward professionalization due to nepotism remains a critical barrier (Monitor, 2023) . This study aims to address this gap by delving into the perceptions of nepotism in Ugandan family businesses, exploring its prevalence and its impact on the unique dynamics within these organizations.
2. Literature Review
2.1. Concept of Family Businesses
Family businesses are a fundamental pillar of the global economic landscape. They represent a distinct form of business organization with unique characteristics, opportunities, and challenges. This review explores recent research on family businesses, highlighting their defining features, contributions to the economy, and key areas of ongoing inquiry.
Recent research emphasizes the influence of multiple generations on decision-making and the pursuit of distinctive goals beyond pure profit maximization (Gersick et al., 1997) . Research by (Astrachan & Shanker, 2011) defines them broadly as entities influenced by multiple family generations, with a focus on long-term vision and potential succession by family members. This perspective aligns with the work of (Davis, 2001) who emphasizes the interplay between family and business systems.
Recent studies delve deeper into the unique characteristics of family-owned firms. (Hitt et al., 2012) highlight their focus on resilience and long-term goals, contrasting with the short-term pressures faced by publicly traded companies. This strength can be attributed to a sense of stewardship across generations, as explored in (Chrisman et al., 2018) .
Family businesses, however, face inherent challenges in navigating the intersection of family dynamics and business operations. Research by (Gersick et al., 1997) highlights the complexities of succession planning within these organizations, while Miller (Miller & Le Breton-Miller, 2017) emphasizes the importance of establishing clear boundaries between family and business matters. Furthermore, a separate study examining the sustainability of family-owned businesses in Willowvale (Chundu et al., 2021) identified underinvestment in innovation, technology, and efficiency as key concerns. These businesses, facing limited capital, unfavorable economic conditions, and stiff competition, often resorted to coping mechanisms like restructuring, cost control, family support networks, and an emotional attachment to the business.
Understanding the intricacies of family businesses is crucial due to their widespread presence and substantial contribution to the global economy. Further research is needed to explore best practices in areas like professionalization, conflict resolution, and intergenerational collaboration.
2.2. Concept of Nepotism
Nepotism, the preferential treatment of family or friends in job appointments and promotions, remains a prevalent concern across various industries (Khanna & Palepu, 2009) . Recent research highlights its detrimental effects on organizational effectiveness. (Friesen et al., 2021) found a negative correlation between nepotism and employee morale and firm performance (Friesen et al., 2021) . This suggests nepotism discourages qualified candidates and disrupts trust within the organization.
Furthermore, nepotism can exacerbate social stratification and hinder social mobility. Bellé et al. argue that nepotistic practices create a closed system where opportunities are limited to those with established connections (Bellé et al., 2023) . This not only stifles innovation but also reinforces existing inequalities.
While some argue nepotism fosters loyalty and familiarity, the research leans towards its negative consequences. Mitigating strategies include implementing blind hiring practices and establishing clear nepotism policies. Further research is needed to explore the cultural nuances of nepotism and develop effective cross-cultural solutions.
3. Research Design and Methodology
This study employed a single cross-sectional research design to investigate the prevalence and perception of nepotism within Ugandan family businesses. The target population comprised 400 employees, including both family and non-family members, working across 10 family-owned businesses in Kampala, Uganda’s capital city. These specific businesses were strategically chosen due to their inclusion of non-family employees, allowing for a broader and more representative sample compared to solely family-run establishments. Data collection primarily relied on a self-administered questionnaire, meticulously developed based on a comprehensive review of relevant literature (Chukwuma et al., 2019; Padgett et al., 2015) . The questionnaire comprised two distinct sections:
1) Demographic Form: This section consisted of 16 questions aimed at gathering information regarding participant demographics, including age, gender, educational background, job classification, and length of service within the company.
2) Perception Form: This section delved deeper into participants’ perceptions of nepotism, encompassing 17 questions. It addressed the perceived existence of nepotism within the company, general views on nepotism, individual experiences with nepotistic practices, the frequency of nepotism observed, and the presence of established anti-nepotism policies within the organization.
Statistical Analysis
The collected data underwent statistical analysis using IBM SPSS v26 software and Smart PLS 4. Descriptive statistics were employed to summarize the data. For single-choice and multiple-choice questions, results were presented as frequencies and percentages (n %). For sorting questions, a comprehensive weighted score was calculated to represent the overall response pattern. This approach provided a clear and concise presentation of the findings, allowing for easy interpretation of the participants’ responses.
4. Results
The study included a total of 400 participants, with a near-equal gender distribution (54% male, 46% female). The majority (93.5%) fell within the age range of 18 - 65, with the largest representation in the 35-year-old and younger category (47.8%). Educational attainment reflected a strong emphasis on higher education, with over half (54.3%) of the participants holding bachelor’s degrees. Regarding work experience, the largest group (39.5%) had been employed for 1 - 3 years within their respective family businesses, followed by those with 3 - 5 years of experience (29.5%). Lastly, the participant pool demonstrated a diverse range of positions within the organizations, with the largest group (44.7%) classified as general staff. This diverse demographic composition provides a well-rounded perspective on the perceptions of nepotism within Ugandan family businesses (Table 1).
Regarding the existence of nepotism, 64.3% of the respondents agreed to its existence, and only 35.8% denied it. Generally, 50.8% of the respondents agreed that nepotism is bad, and only 7% were in favor of nepotism. Moreover, 63.3% of them had experienced nepotism, while 36.8% had never experienced nepotism, implying that nepotism is a common phenomenon in most family business enterprises. That said, 28.3% of the respondents reported that nepotism is never practiced in their company, 21.5% rarely, 27.5% sometimes, 17.5% often, and only 5.3% reported that their companies always practice nepotism. The high existence of nepotism (64.3%) could be attributed to the absence of anti-nepotism policies, accounting for 79.5% of respondents, while only 20.5% had anti-nepotism policies in their organizations (Table 2).
The majority of the respondents from our study reported having obtained the job through relative connections (36.5%) followed by internal memos (31.8%). Adverts (8.8%) were the least means of job opening in this study as shown in Table 2. More than half of the respondents obtained jobs through nepotism ties (36.5% through relatives and 23% through close friendships).
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Table 1. Demographics survey results analysis.
Source: Authors’ compilation through Percentage and frequency.
Source: Authors’ compilation through Percentage and frequency.
5. Discussion
Curtailing nepotism presents a significant challenge within Ugandan family businesses. When family members hold influential positions and influence hiring decisions, objective recruitment practices become difficult to implement. This cultural acceptance of nepotism as a normative practice further complicates eradication efforts. In Uganda’s business landscape, securing employment is often perceived to be contingent on personal connections, particularly within family-owned enterprises, where nepotistic practices are more prevalent compared to other organizations (Chrisman et al., 1998) . Notably, the perception of nepotism itself is not uniformly negative, with some viewing it as a neutral practice (Gomez-Mejia et al., 2007) . However, Adam Bellow (Bellow, 2004) proposes a contrasting perspective, suggesting a shift towards a “post-kinship” society where businesses fail to recognize the potential benefits of fostering strong familial connections within the organization.
Despite its prevalence in everyday life, the perception of nepotism within Ugandan family businesses remains understudied. This research aims to address this gap by investigating employee perceptions of nepotism in Ugandan family-owned enterprises. Our findings reveal a high incidence of perceived nepotism, with 64.3% of respondents acknowledging its existence. Therefore, this study investigated the perception of nepotism in Ugandan family businesses. This finding aligns with previous research by (Bellow, 2004) who identified a similar prevalence of nepotism in England and other countries. Additionally, studies (Almostadi, 2020) on nepotism in the USA and Saudi Arabia highlight its cultural and lifestyle integration, contributing to its high prevalence. Notably, the high number of family-owned businesses in the USA, comparable to the growing trend of youth establishing such businesses in Uganda, further encourages nepotistic practices. Furthermore, our results resonate with research on nepotism within Ugandan government parastatals. This pervasive nature of nepotism presents a significant challenge for Ugandan family businesses, as widely discussed in various publications. Notably, research by Spahi (Spahi et al., 2022) identifies nepotism as a leading cause of decreased employee motivation. While only 35.8% of respondents denied the existence of nepotism altogether, a substantial portion (64.3%) acknowledged its presence, highlighting its potential impact on Ugandan family businesses.
Despite observing a high prevalence of nepotism (64.3%) within Ugandan family businesses, a majority of respondents (50.8%) held negative views on the practice. This finding aligns with Adam Bellow’s (Bellow, 2004) perspective in “In Praise of Nepotism,” where he criticizes nepotism as a means for individuals to selfishly benefit relatives. Similarly, our study revealed evidence of unfair treatment towards non-family employees during recruitment processes, suggesting a preference for hiring kin regardless of merit. This reinforces the need to discourage nepotism in family businesses, with exceptions made only for exceptionally qualified candidates possessing the necessary skills and experience for the position. Supporting this notion, research by Jone L. Pearce (Jones, 2015) demonstrates the detrimental impact of nepotism on employee-supervisor relationships and, consequently, organizational performance.
Supporting this notion, Spahi (Spahi et al., 2022) identified the negative consequences of nepotism on managers and employees in Kosovo. Similarly, (Sugundan et al., 2018) emphasized the detrimental nature of nepotism, describing it as a “very unhealthy practice” that disrupts human resource recruitment and demotivates non-family employees. Furthermore, Zulfiqar et al. (Zulfiqar et al., 2019) outlined a range of negative outcomes associated with nepotism, including decreased job satisfaction, motivation, work commitment, employee trust, social capital, and individual performance. Additionally, they identified negative impacts on decision-making, worker confidence, human resource management practices, and ultimately, employee turnover and experiences of workplace discrimination.
Research suggests that the prevalent practice of nepotism can negatively impact organizational performance in several ways (Chandler et al., 2002) . Firstly, the placement of unqualified family members in unfamiliar positions can lead to decreased productivity due to increased error rates and operational inefficiencies (Chrisman et al., 1998) . This highlights the importance of meritocratic principles in ensuring organizational effectiveness. Secondly, nepotistic promotion practices, particularly when favoring family members lacking prior experience within the organization, can demotivate long-standing employees who invest significant effort in career advancement (Hustedde et al., 2004) . This dissatisfaction with unfair promotion systems can manifest as a decreased work ethic and reduced overall performance. Consequently, mitigating nepotism and fostering a meritocratic culture becomes crucial for organizational success.
While our findings revealed that a limited portion (7%) of respondents viewed nepotism positively, it is essential to acknowledge potential benefits within the context of Ugandan family businesses. Proponents argue that nepotism can serve as a means of identifying dedicated employees, potentially due to a shared sense of loyalty and commitment to the family enterprise’s success (Chrisman et al., 1998) . Additionally, anecdotal evidence suggests that some Ugandan family businesses have thrived under nepotistic practices. However, it is crucial to emphasize the importance of balancing such practices with broader organizational goals.
Lansberg as cited in (Muhammad, 2011; Vveinhardt & Sroka, 2020) suggests that family member inclusion in the early stages of a small family business can foster a stronger sense of commitment compared to non-family members. Similarly, (Donnelley, 1988) posits that family members with established positive reputations can enhance trust and reputation for the organization by association. While these arguments hold merit, it is vital to acknowledge the potential drawbacks associated with nepotism, such as the demotivation of non-family employees and the appointment of unqualified individuals. Therefore, a nuanced approach is necessary to acknowledge the potential benefits of nepotism while mitigating its risks and ensuring a meritocratic system for long-term success.
Howbeit, the respondents reported a high existence of nepotism in family businesses (64.3%), only 63.3% of the respondents reported having experienced nepotism, and 28.3% never experienced nepotism in their organizations, implying that nepotism is relatively experienced in family businesses. Nepotism was mostly practiced based on kinship, self-entitlement, and belongingness, implying that employers or recruiters were not professional with the aspiring non-family candidates with skills and experience. Hence, denying talented and experienced personnel a chance for employment subsequently lowers employee morale and motivation.
While our study revealed a high perceived prevalence of nepotism (64.3%), a discrepancy emerged when examining the percentage of respondents who personally experienced it 63.3. This suggests that while nepotism is perceived as widespread, it may not be as universally practiced within every organization. Despite this discrepancy, nepotism assessed recruitment based on kinship, sense of entitlement, and belongingness, indicating a tendency towards nepotistic practices. This aligns with concerns raised by (Chrisman et al., 1998) that such practices can disadvantage qualified non-family candidates by prioritizing familial ties over meritocratic selection processes. Consequently, denying opportunities to talented and experienced individuals based on familial ties can negatively impact employee morale and motivation, potentially hindering organizational performance (Firfiray et al., 2018; Gomez-Mejia et al., 2007) .
In this study, we observed that 35% of the respondents obtained jobs through relative connections and 24.2% by close friendship acquaintance which is in relative comparison to a report by Vladyslav Dovgopoliuk which indicated that 42% of Americans have secured a position or job opportunity due to nepotism while 42% of workers in the UK have landed a job due to a personal acquaintance (Dovgopoliuk, 2023) .
Our study revealed that 36.5% of respondents obtained their positions through connections with relatives, while 23% secured their jobs through close friendships or acquaintances. These findings offer insights into the prevalence of nepotism within Ugandan family businesses. Notably, these figures align, to some extent, with international reports on nepotism practices. For instance, Dovgopoliuk (Dovgopoliuk, 2023) reported that 42% of individuals in the United States secured jobs through nepotism, while the same percentage in the United Kingdom obtained employment via personal connections. It is important to acknowledge that direct comparisons across geographical contexts are complex due to diverse cultural and social norms that may influence perceptions and practices surrounding nepotism. Nonetheless, the observed prevalence in Uganda echoes the existence of nepotism at varying degrees across different countries, highlighting the need for further research and potential interventions to ensure meritocratic and ethical recruitment practices in diverse organizational settings.
The high existence of nepotism (64.3%) could be attributed to the absence of anti-nepotistic policies, accounting for 79.5% of respondents, therefore Uganda family businesses and other firms should borrow a leaf from the Americans to counter nepotism through rolling-out training initiatives aimed at highlighting the adverse effects of nepotism and endorsing hiring and advancements based on merit (already implemented in 72% of firms), maintaining strict policies against nepotism, detailing the company’s position on employing family members and the repercussions of breaches (already implemented in 78% of enterprises), adopting a multiple reviewers system to assess performance (already implemented in 70% of institutions) (Dovgopoliuk, 2023) . Furthermore, 40% of organizations in the USA have set strict policies against nepotism, and 60% have done more research and gained enough information on nepotism’s harmful and ethical dilemma (Ignatowski et al., 2020) .
6. Research Contributions and Significance
The specific prevalence and perception of nepotism within family businesses in the context of Ugandan remains understudied. This study significantly contributes insightful information through a comprehensive demographic analysis of participants across various positions and experience levels. As one of the few studies providing a unique perspective on nepotism in Ugandan family businesses, this current study adds to the scant body of information regarding this particular regional setting. While the study focuses on Ugandan family businesses, the observed prevalence of nepotism is consistent with reports from other countries. Therefore, this study highlights the urgent need for more comprehensive comparative research on nepotism in different cultural contexts, which can support the development of effective interventions to mitigate its negative consequences in different organizational settings.
The findings of this study on employee perceptions of nepotism and its prevalence can serve as a valuable resource for policymakers in Uganda. The data can support the development and implementation of effective anti-nepotism measures specifically tailored to the Ugandan family business context. Additionally, the current study highlights the potential benefits of transparent hiring practices that policymakers can promote through legislation or awareness campaigns. By revealing the high prevalence of perceived nepotism and its potential negative impact on employee morale, motivation and performance, this study highlights the ethical concerns associated with nepotistic practices in Ugandan family businesses. These findings can inform discussions and interventions aimed at fostering a more meritocratic work environment that promotes employee well-being and organizational effectiveness.
Overall, this study offers valuable insights into the complexities of nepotism within Ugandan family businesses. It lays the groundwork for future research and policy development aimed at fostering ethical and meritocratic recruitment practices in these organizations.
7. Conclusion, Limitations and Future Directions
7.1. Conclusion
This study’s findings highlight a significant prevalence of nepotism within Ugandan family businesses. Over 64.3% of respondents acknowledged its existence, and more than half (63.3%) reported personal experience with it. Notably, 50.8% of respondents viewed nepotism negatively. Furthermore, the absence of anti-nepotism policies in 82.8% of businesses suggests a critical gap in formal regulations. These findings support the argument that introducing clear anti-nepotism policies and processes can be a valuable tool in mitigating nepotistic practices. Such policies, coupled with legislative measures outlining specific nepotism-related offenses and penalties, could potentially shift the focus from nepotism as a moral or ethical concern to a legally regulated practice. This study contributes to the existing body of knowledge on ethical human resource practices within Ugandan family businesses by empirically demonstrating the prevalence of nepotism and the potential effectiveness of formal interventions.
7.2. Limitations
This study acknowledges limitations in its generalizability due to the sample size and design. Focusing on a single Ugandan region restricts the applicability of findings to the broader national context. To address this, future research could employ a larger, nationally representative sample. This would enhance the study’s external validity, providing a more comprehensive picture of nepotism prevalence and perceptions within Ugandan family businesses.
Furthermore, the paper could be strengthened by delving into the cultural context of nepotism in Uganda. Exploring how cultural norms influence the perception and practice of nepotism within this specific business environment would provide valuable insights. Finally, while the study emphasizes the negative aspects of nepotism, acknowledging the potential benefits of family involvement, such as shared commitment and continuity, would offer a more balanced perspective.
7.3. Future Directions
1) Nationwide Study: Conduct a comprehensive study with a larger sample size that is geographically representative of Uganda.
2) Qualitative Research: Integrate qualitative research methods, such as interviews with employees and business leaders, to gain deeper insights into the motivations behind nepotistic practices and their perceived impact.
3) Comparative Analysis: Investigate the effectiveness of existing anti-nepotism policies in other countries. Explore the potential for adapting these policies to the Ugandan context, considering cultural nuances and legal frameworks.
By addressing these limitations and pursuing the suggested future research directions, this study can contribute significantly to a more nuanced understanding of nepotism in Ugandan family businesses.