7 (143) 2013

Vveinhardt J., Petrauskait L.

Vytautas Magnus University, Lithuania

NEPOTISM AS A CAUSE AND CONSEQUENCE OF UNHEALTHY

ORGANIZATIONAL CULTURE

Abstract
Nepotism is analysed in the article in the context of unhealthy
organizational culture. In order to clarify the concept of the connections of
nepotism as a management anomaly with unhealthy organizational culture, the
hypotheses, which are tested by correlation analysis and t-test methods, are
formulated. The research has shown the close interrelationship between
nepotism and unhealthy organizational culture.
Keywords: nepotism, unhealthy organizational culture, management
anomaly, causes and consequences of nepotism.

Introduction

Relevance of the research. Nepotism is a natural social phenomenon, but

it threatens to become a management anomaly in an organization. Although the
phenomenon is regulated in the public sector organizations, the freedom of
treatment of the phenomenon remains an object of debate (see: Vveinhardt,
2012a, 2013). Nepotism is usually perceived as protecting a relative or a friend,
i.e., it is invested not in productivity, but in the cluster based on family
connections. The quality of human resources in activities of both public and
private sector organizations becomes risky, as the management processes are
affected by subjective criteria, employees interpersonal relationships are
destroyed. Nepotism is often inseparable from favouritism and protectionism,
which are described quite differently, but protection of someones own cluster
becomes their common denominator. In order to improve management of the
organizations both formalised and unformalised ethical evaluation of the
phenomena, refining the values, and formation and development of the culture,
unfavourable to unfair decisions, are necessary. The phenomena of nepotism,
favouritism and protectionism are related, capable of existing side by side, and
together lead to unfair managerial decisions. There is no doubt that there is a
connection between nepotism and organizational culture. Nepotism is a dual
organizational-management anomaly, affecting organizational culture, and is a
consequence of sick organizational culture (see: Vveinhardt, Petrauskait, 2013a,
2013d), however, empirical studies are needed to substantiate these relations.
Problem of the research is set by the question how strongly nepotism
refers to organizational culture?
Problem exploration level. On the global level the phenomenon of
nepotism is still sparsely researched (Ewing, 1965; Hayajenh, Maghrabi, Al-
Dabbagh, 1994; Wong, Kleiner, 1994; Abdalla, Maghrabi, Raggad, 1998;
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Vinton, 1998; Bellow, 2003; Padgett, Morris, 2005; Arasli, Tumer, 2008;
Scoppa, 2009; Bte, 2011; Kele, zkan, Bezirci, 2011; Vveinhardt, 2012a,
2012b; Ulrik, 2012 et al.). The studies of nepotism in public and private sector
are making the first steps in Lithuania. The authors of this article theoretically
(Vveinhardt, Petrauskait, 2013a) and empirically (Vveinhardt, Petrauskait,
2013d) substantiated the links of nepotism with degenerate organizational
culture, analysed the phenomenon of nepotism looking through the prism of
favouritism (Vveinhardt, Petrauskait, 2013b), carried out a diagnostic research
on the intensity of expression of nepotism (Vveinhardt, Petrauskait, 2013c). The
issues of sick organizations are touched in the papers of these scientists: L.
imanskien (2002), M. F. R. Kets de Vries, D. Miller (2004), J. O. Schwarz
(2007), I. I. Mitroff (2004), M. F. R. Kets de Vries, L. Guillen-Ramo, K. Korotov
(2009), etc.
Object of the research: determination of interrelations of nepotism and
organizational culture.
Aim of the research: to check the connections between nepotism and
unhealthy organizational culture.
Methods of the research. In order to reveal the level of exploration of
nepotism and unhealthy organizational culture in the scientific literature, the
methods of analogy, analysis, systematisation and comparison were used. The
methods of algorithmization and generalisation were used in the article as well.

Research methodology

During the research three hypotheses were tested: (H1) Consequences of

nepotism do not coincide with characteristics of unhealthy organizational
culture; (H2) Consequences of nepotism coincide with characteristics of
unhealthy organizational culture; (H3) Nepotism has a significant indirect
impact on organizational culture; (H4) Sick organizational culture is defined as
an object, which accepts nepotism.
The test used in the research is composed in the following way: items on
nepotism are composed on the ground of the questionnaires used in the studies of
H. F. Abdalla, A. S. Maghrabi, B. H. Raggad (1998) and H. Arasli, M. Tumer
(2008), items on unhealthy organizational cultures are composed on the ground
of scientific works of M. K. De Vries (2004), L. imanskien (2002), J. O.
Schwarz (2007), I. I. Mitroff (2004). The test consists of 2 scales, 6 subscales.
The 1st scale consists of 4 subscales: co-workers behaviour (the fears associated
with executives relatives), executives behaviour (the fears associated with
executives relatives), positive and negative evaluation of nepotism; the 2nd scale
consists of 2 subscales: the features of organizational culture and employees
reaction to the organizational culture with the features of nepotism. During
implementation of the research in individual steps of the test Likert scale was
used. The research was carried out at the end of 2012 the beginning of 2013 in
public and private sector organizations of the Republic of Lithuania. According
to the data of the Department of Statistics of Lithuania of the last quarter of 2012,
the average number of employees is 963,453. The sample was calculated
according to Paniotto formula: n=1/(2+1/N), where is tolerable error, which
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in this case is 0.07, therefore, the necessary number of respondents is 204. 238
respondents were interviewed, therefore, the received results properly represent
the researched population.

Testing hypotheses

The internal reliability of the test used in the research has a high Cronbach
alfa coefficient (min 0.903, max 0.962). Spearman-Brown coefficient, the
coefficient of increased reliability, is also important. Values of Cronbach alfa
and Spearman-Brown coefficients in this case are close to each other (Spearman-
Brown min 0.844, max 0.938).
A strong and very strong positive correlation was found between such
dimensions as employees behaviour and unhealthy (there exists nepotism)
organizational culture (r = 0.807 in the public sector, r = 0.622 in the private
sector). Moderate and strong correlation was determined between executives
behaviour and sick organizational culture (r = 0.601 in the public sector, r =
0.404 in the private sector). A strong negative correlation between employees
behaviour and reaction to the organizational culture affected by nepotism (r = -
0.713 in the public sector and r = -0.722 in the private sector) was found. No
statistically significant differences have been found between sectors. The features
of unhealthy organizational culture and the features of a healthy organizational
culture have a strong negative correlation (r = -0.713 in the public sector and r = -
0.766 in the private sector). Testing the hypotheses by Students t-test, high level
of reliability was found in both sectors: = 0.01.
Figure 1 presents a block diagram of the algorithm of hypotheses testing.
The significant established fact is that in respect of co-workers behaviour
nepotism is most sensitively manifested in communication with members of the
organization who have family connections (with leadership) and during
assessment of their work. Carefulness, fear, internal conflicts are the most
commonly occurring elements in both the public and private sector organizations.
Evaluating executives behaviour in respect of nepotism, a subjective limitation
of actions of lowest level management in the face of a nepot is revealed the most
prominently. That is, direct or perceived threats hinder from effectively
performing management functions.
It should be noted that the research was carried out in a specific
(historically formed national socio-cultural) medium, therefore, the ratio of
nepotism and connections of organizational culture in other populations may
vary. However, in order to confirm or reject the influence of nepotism on
organizational culture in individual organizations, a logical sequence with initial
position, firstly determining the connections of existence of the fact of nepotism
with the state of organizational culture, which is represented by employees
reactions, is possible. Depending on the expression of nepotism, the ratio of these
connections may vary.

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Start

p < 0,001

H1
Consequences of nepotism do not Yes
coincide with characteristics of
unhealthy organizational culture
The hypothesis has been verified

No

The hypothesis has not been verified

p < 0,001

H2
Consequences of nepotism coincide Yes
with characteristics of unhealthy
organizational culture

The hypothesis has been verified

No

The hypothesis has not been verified

p < 0,001

H3
Nepotism has a significant Yes
indirect impact on organizational
culture

The hypothesis has been verified

No

The hypothesis has not been verified

p < 0,001

H4
Sick organizational culture is defined Yes
as an object, which
accepts nepotism

The hypothesis has been verified

No

The hypothesis has not been verified

Finish
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Figure 1. Algorithm of links between nepotism and organizational culture
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Conclusions and discussion

Hypothesis H1, raised at the beginning of the research, was not proved, as
the existing relationship between nepotism and unhealthy organizational culture
was found. Hypotheses H2, H3 and H4 were proved. The consequences of
nepotism coincide with features of unhealthy organizational culture, nepotism
makes a significant indirect impact on organizational culture, i.e. makes it more
sick. The study shows that with strengthening the expression of nepotism on
managerial plane, the state of organizational culture worsens. In addition, with
qualitative changes of organizational culture (perceiving intervention as active
prevention) nepotism has a tendency to decrease. Thus, even in the cases, when
nepotism is not detected, it is reasonable to develop the policy of organizational
culture targeted against nepotism preventively.
The composed algorithm is appropriate and valuable for every
organization, facing the problem of nepotism. Since algorithms allow submitting
unambiguous data, which are refiltered through a solid logical sequence of
instructions, the received due results are relatively objective. After the
assessment of the existence and impact of the phenomenon of nepotism, the
organization can take concrete actions to solve the problem.

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