Contents lists available at ScienceDirect Human Resource Management Review journal homepage: www.elsevier.com/locate/hrmr The emergence of bifurcation bias from unbalanced families: Examining HR practices in the family firm using circumplex theory Joshua J. Daspit ⁎ , Kristen Madison, Tim Barnett, Rebecca G. Long Mississippi State University, College of Business, P. O. Box 9581, MS 39762, United States ARTICLE INFO Keywords: Circumplex theory HR practices Bifurcation bias Family system ABSTRACT Family firm human resource (HR) research focuses largely on examining differences in HR practices between family and nonfamily firms or between family and nonfamily employees within family firms. Few studies, however, attempt to explain why these differences emerge. We offer insight into the source of heterogeneous HR practices by investigating attributes of the owning family. We integrate a primary family science perspective, circumplex theory, to describe how an unbalanced family structure leads to unbalanced HR systems in the family firm. An unbalanced HR system is depicted as a form of bifurcation bias, or the asymmetric treatment of family and nonfamily employees via the family firm's HR practices. By integrating and extending circumplex theory into the family firm, insight is offered into how the structure of the family system influences the structure of the family business HR system, thus impacting firm outcomes. Implications for both scholars and practitioners are offered. 1. Introduction Depending on the precise definition employed, estimates suggest that family businesses comprise 90% or more of all firms (The Economist, 2015), employ 50% of the workforce, and create 75% of new jobs worldwide (Gersick, Davis, Hampton, & Lansberg, 1997). A common stereotype of the family firm is of a small mom-and-pop shop staffed by family members, but a recent analysis by the Boston Consulting Group finds that over 50% of the largest companies in India, 40% of the largest companies in Germany and France, and 33% of the largest firms in the U.S. can be reasonably defined as family firms (The Economist, 2015). Logically then, many employees working in family businesses are not family members, and the survival and growth of these firms is often dependent on the successful integration of nonfamily employees (Dyer, 1989; Stewart & Hitt, 2012). This suggests the need for implementing professional human resource (HR) management practices (Dekker, Lybaert, Steijvers, Depaire, & Mercken, 2012), including those related to staffing, training and development, and compensation. However, family firms have a reputation for exhibiting favoritism toward family members (Lee, 2006a; Lubatkin, Schulze, Ling, & Dino, 2005), which potentially manifests itself in their HR selection and pay practices (Chua, Chrisman, & Sharma, 2003; Karra, Tracey, & Phillips, 2006; Schulze, Lubatkin, & Dino, 2003a, 2003b; Schulze, Lubatkin, Dino, & Buchholtz, 2001). This phenomenon is termed bifurcation bias and is defined as the unbalanced treatment of family and nonfamily members within a family firm (Verbeke & Kano, 2012). Extant research investigates bifurcation bias through the lens of well-established organizational theories such as transaction cost economics and agency theory (e.g., Chua, Chrisman, & Bergiel, 2009; Verbeke & Kano, 2012). While fully acknowledging the importance of these and other relevant organizational theories in family firm research, we suggest that a more explicit focus on the http://dx.doi.org/10.1016/j.hrmr.2017.05.003 ⁎ Corresponding author. E-mail addresses: josh.daspit@msstate.edu (J.J. Daspit), kincy.madison@msstate.edu (K. Madison), tim.barnett@msstate.edu (T. Barnett), rebecca.long@msstate.edu (R.G. Long). Human Resource Management Review xxx (xxxx) xxx–xxx 1053-4822/ © 2017 Elsevier Inc. All rights reserved. Please cite this article as: Daspit, J.J., Human Resource Management Review (2017), http://dx.doi.org/10.1016/j.hrmr.2017.05.003