# Bifurcation Bias in Executive Compensation and Family Firm Performance The role of normative context in fairness and performance in family firms. - **Source:** [Journal of Management Studies](https://onlinelibrary.wiley.com/journal/14676486) - **Published:** 2026-07-24 - **Topic:** [Leadership](https://brifing.si/c/leadership) - **Original article:** - **On Brifing:** https://brifing.si/s/4bd40078-d52b-49e3-a2ad-61f2a2c5ecb7 ## Fairness in Family Firm Compensation How does preferential treatment of family managers affect firm performance? This study examines the impact of compensation bias in publicly listed Chinese family firms. According to justice theories, whether family membership is perceived as a legitimate entitlement is crucial. ## The Role of Normative Context The research shows that the negative effects of compensation bias depend on normative context. In regions with strong traditional values and firms with greater family involvement, the impact is mitigated. However, in highly competitive industries, the negative effects are amplified. ## Justice and Entitlement Theories Drawing on justice and entitlement theories, the study explores how perceptions of family membership legitimacy shape fairness judgments. When family membership is not seen as legitimate, compensation bias more significantly harms performance. ## Family Firms in China The study uses longitudinal data from publicly listed family firms in China. It analyzes how cash-based compensation advantages for family managers affect performance. The results highlight the critical role of normative context in these dynamics. ## Impact in Competitive Industries In competitive industries, the negative effects of compensation bias are more pronounced. This demonstrates how industry dynamics influence managers' fairness perceptions. High competition environments make unfairness more contentious. ## Practical Recommendations The study offers practical guidance for family firms balancing fairness and family-centric goals. Considering normative context can help firms manage compensation policies more effectively, minimizing performance losses. ## Sources covering this story - https://onlinelibrary.wiley.com/doi/10.1111/joms.70144?af=R — --- _Summary written by Brifing from the original reporting. Copyright in the original article belongs to its publisher; read the full piece at the link above._