Abstract

We develop and test a multilevel model of caring climate in family firms. We argue that family firms care more about employee welfare than nonfamily firms in order to protect and enhance family owners’ socioemotional endowments in their firm. Contrary to recent studies suggesting that family firms are poor employers, we theorize and find that employees in family firms (compared to nonfamily firms) more likely experience a caring climate that treats them asessential stakeholders. We also argue and find support for the notion that employees’ perceptions of caring practices by the firm and its representativesis related to higher firm-level labor productivity and greater individual-level employee thriving. Finally, we find that caring climates in family firms are more prevalent when the CEO is a member of the founding family or when family members are on the board, more pervasive throughout the organization regardless of employees' pay level, and more robust, that is, resilient to changes in revenue. Empirical support for our multilevel model is based on survey and archival data from over 54,000 employees in 180 firms in Brazil. We discuss implications for theory and practice.