Separate family and business : how obvious is it?

It is sometimes difficult to think rationally when feelings befuddle our judgement. This reflexion, almost existential, applies perfectly to business leaders as soon as a child or a relative is also employed in the family business. It was the case in the famous novel and movie, The Godfather, in which multiple mistakes and betrayals made by Fredo, one of the brothers, gave his name to a phenomenon, the “Fredo effect”.

The Fredo effect, what is it ?

Fredo Corleone is fictional character in the novel The Godfather and its cinematographic adaptation that entered the posterity for his family betrayal which led to his fall. According to the authors of this study, the “Fredo effect” (Kidwell, Kellermanns, Carter & Eddleston, 2012) refers to a family member employed in the firm and that hampers its continuity with counterproductive behaviors and/or harmful schemes, that is to say that consequences compromise the firm performance. It is a complex phenomenon of which repercussions  can be difficult to resolve in a family business.

The relation and the interactions parents-children form a first explanation to the damaging behavior of the children and that, in spite of their original intentions, whether they are good or not. As an example, the parents or other relatives tend to manifest an unshakable faith and continuous encouragements towards children employed even if they are incompetent or do not respond their duties.