Abstract

One key element distinguishing family firms from non-family firms is the role of the family’s religious beliefs, with growing attention on understanding the fit between religion and family in shaping a business’s ethical conduct. A family firm’s behavior is embedded in an institutional context, and it is important to understand how multiple institutional logic shapes a family firm’s values and ethical behavior. While scholars agree on the central significance of family values and religion in shaping family firms’ values and ethical behavior, a definitive consensus on the influence of family values and religion in confronting ethical challenges and shaping ethical behavior has yet to be reached. We lack a theory explaining how family, family business, and religion shape a family firm’s ethical conduct. We conducted a qualitative study to investigate the role of family values and religion in shaping a family firm’s ethical conduct. The results reveal four themes, namely (a) ethical challenges faced by family firms, (b) family values shaping ethical behavior, (c) religion providing a rationale for family firms’ ethical decision-making, and (d) outcomes of ethical decision-making. The principal contribution of our study is clarifying the role of multiple institutional logics in the form of religion and family in explaining ethical behavior. Our findings suggest that the fit between religion, family, and business as an institution guides decision-making, helps family businesses earn a positive reputation in the community by displaying ethical behavior, and develops a positive workplace climate.