Bifurcation Bias in Family Firms: The Role of Restricted vs. Extended SEW

Abstract

Bifurcation bias—the asymmetric treatment of family and non-family managers—is a persistent issue in family firms, particularly within human resource (HR) practices. While prior research identifies socioemotional wealth (SEW) as a key driver of bifurcation bias, its role has often been examined as a singular construct, limiting insights into the direction of biased treatment. Drawing on Miller and Le Breton-Miller’s (2014) SEW typology, this study differentiates between Restricted SEW, which prioritizes family-centric goals at the expense of non-family stakeholders, and Extended SEW, which emphasizes firm sustainability and broader stakeholder interests. We hypothesize that restricted SEW strengthens bifurcation bias favoring family managers, while extended SEW reduces it. Furthermore, we explore the moderating role of board professionalization, arguing that professional boards—characterized by non-family representation and active oversight—can mitigate both forms of SEW-driven bias. By introducing a novel continuous measure of bifurcation bias in HR practices, this study advances understanding of SEW’s nuanced effects and governance mechanisms that can promote fairness in family firms.