What entrepreneurs and business owners should know about emotions

Emotions are ever-present in businesses. They influence decisions, relationships, and the long-term direction of the company. Yet, despite their decisive role, emotions are often underestimated or even treated as taboo in practice. 

The idea that entrepreneurial decisions, and particularly in family businesses, can be made free of emotion is not only a utopian illusion, but has been thoroughly disproven by scientific research. Long-standing experience shows that it is often not economic conditions that determine whether a family business thrives or fails. In many cases, it is the emotion-driven decisions of the owning family.

“Self-Conscious and Moral Emotions in Collectives” (2025) (1) focuses specifically on two emotional forces that often operate in the background: pride and guilt. These are so-called “self-conscious” emotions, because they are feelings tied to our self-image and moral awareness. Such emotions emerge not only at the individual level, but also collectively, within teams, organisations, and families.

Family businesses are an ideal object to study them as they are characterised by the close interconnection of family, ownership, and enterprise. This intertwining creates not only economic but also emotional complexity. Family identity, cross-generational loyalty, and moral values shape the actions of entrepreneurs and employees alike.

The book draws on seven empirical studies with more than 1,000 participants, presented in four chapters. The goal was to better understand how guilt and pride operate in the business context, especially in regard to family businesses, and what this means in practice. In the following, some of the insights are outlined.

Responsibility Across Generations: Intergenerational Emotions of Successors

Imagine the following scenario: You work in a company and learn that a predecessor of your job was involved in unethical business practices. Would you feel guilty? Many would say they bear no responsibility for what happened before their time and therefore have no reason to feel guilty. But what if the misconduct was not committed by just any organisational member, but by a close family member? Suppose it was your father, your mother, your siblings, or another member of your immediate family. Would your emotional reaction change?

This is precisely what makes family businesses unique. Unlike other firms, responsibility is often inter- and transgenerational. The first study (2) places this phenomenon at its core, examining whether successors in family businesses feel guilty about the behaviour of earlier generations. This might involve morally questionable business practices, environmental damage, or decisions that drew social criticism in the past. Over 100 members of large to very large family businesses were surveyed. The results show that such feelings of guilt do indeed occur.

Interestingly, family members who identify strongly with their family and its history are less willing to acknowledge past mistakes. They tend to justify the past and glorify the company’s history and its predecessors. By contrast, successors who feel less emotionally tied to their family show a stronger sense of collective responsibility and guilt. This emotional distance apparently enables them to confront the misconduct of their forebears and accept responsibility and their emotional consequences.

These dynamics translate into tangible lessons for practice. Feelings of guilt can encourage family businesses to confront their past, address misconduct, and initiate ethical change. Consciously engaging with family history can lead to credible communication both inside and outside the business. It often has a healthy, cleansing effect, and it can ultimately help prevent the repetition of past mistakes. Even uncomfortable emotions such as trans- or intergenerational guilt can thus drive positive change and more responsible future behavior.

Identification with Work, Collective Emotions, and Responsible Action

The second study focuses on industries with a difficult reputation, often linked to moral scandals (3). Two surveys with nearly 300 respondents each were conducted at different points of time.

A striking pattern emerged. People with a moderate level of identification with their profession felt the strongest guilt for the misconduct of their professional group. Those who identified very strongly with their professional role tended to justify mistakes and reject responsibility. Those with little identification felt unaffected. 

In other words: too much identification leads to defensiveness, too little leads to indifference.

The same principle holds true for family firms. A stance that combines emotional connection with critical distance offers the best basis for responsible conduct. When identification becomes either too intense or too distant, engagement suffers. The key lies in finding a thoughtful balance between loyalty and reflection.

Can We Predict Emotions and Responsible Behaviour?

A series of three additional studies explored whether individuals can accurately assess their own emotions and moral behaviour (4). Participants were first asked to imagine a scenario involving collective misconduct and to predict how they would feel and respond. Later, in an experiment, they were placed in the very situation they had previously envisioned. Their predicted reactions were then compared with their actual emotional and behavioural responses.

The results paint a sobering picture of human ability to evaluate emotions and moral behaviour accurately. Participants often overestimated the intensity of their feelings of guilt. They assumed they would feel very bad and be motivated to make amends. In reality, their emotions were weaker and their behaviour less engaged than predicted. 

Follow-up surveys after four weeks and again after five years showed that these results remained relatively stable over time. Even worse, participants learned little from the experience they had made during the experiment. Even after living through the emotional situation, they continued overestimating their future emotional reactions.

The practical implications are important for our understanding of organisational behaviours. Emotional appeals such as 'Imagine how you would feel...' are of limited effectiveness. Organisations, groups and teams should not rely solely on members’ moral self-assessment but must create concrete structures that promote responsible action. For individuals, the findings serve as a reminder not to overestimate oneself. We tend to see ourselves as more moral than we actually are when the decisive moment arrives. What matters is not how people believe they will act, but how they are supported in the moment to truly take responsibility.

Pride in the Family Business: A Question of Balance

The fourth part of the book examines the feeling of pride (5). Pride is widespread in family businesses and can be a powerful unifying force. It stems from shared history, collective achievements, and family bonds. Pride can motivate, strengthen identification with the company, and enhance its external reputation. At the same time, it carries risks. Pride is especially problematic when expressed by people whose contribution to the company’s success is unclear. When family members without an operational role publicly display pride, it may quickly be perceived as hubristic and wrong. For example, think of a successor who has contributed little yet presents themselves as proudly entitled. Observers may interpret this as arrogance or boasting.

Research distinguishes between hubristic pride and authentic pride. Authentic pride is rooted in personal achievement, real successes, and visible commitment. It comes across as credible, connecting, and inspiring. Hubristic pride, by contrast, is perceived when someone is proud of something that does not appear self-earned or deserved, such as family lineage or heritage. This can quickly be seen as arrogance or self-promotion, particularly when the person has played no clear role in the company’s success.

Two experiments, one in Western Europe and one in Asia, tested under what conditions pride in the family business is perceived positively or negatively (5). The studies showed that pride expressed by family members who emphasise their ancestry or family name is judged especially critically. Cultural and gender factors also influence perceptions. In addition, the study showed that pride expressed by women was more often evaluated negatively. In Asian cultures, pride was viewed more negatively overall.

In a nutshell: pride should be used in corporate communication carefully and intentionally. It is most effective when it is authentic, earned, and expressed with gratitude and humility. For family businesses, this means pride should be communicated honestly and in moderation. Only then can it unfold its full potential without causing unintended irritation or negative perceptions.

To conclude...

Overall, the book demonstrates that emotions are not a side issue but an essential element of leadership and development in businesses. Feelings of guilt can drive renewal, while pride can foster cohesion, but both must be managed with care. The emotional ties of those involved are a decisive factor influencing the willingness to assume responsibility and embrace change.

For entrepreneurs as well as for advisors of businesses, the findings provide valuable insights. Understanding how emotions work in groups allows leaders to guide more consciously, resolve conflicts more constructively, and strengthen the company’s identity over the long term.

There are also important implications for policymakers. Family businesses form the backbone of many economies. The emotional dynamics within these companies affect not only their economic stability but also their social responsibility. When shaping succession rules, corporate ethics initiatives, or governance support programmes, lawmakers and institutions should consider that emotional factors play a central role. Measures that enable or support moral learning and the processing of past misconduct can strengthen not only individual firms but also overall trust in the family business sector.

The book thus offers not only an academic contribution but also a practice-oriented foundation for responsible business leadership in the family context and beyond.

References

(1) Self-Conscious and Moral Emotions in Collectives - https://link.springer.com/book/10.1007/978-3-658-48206-0

(2) Collective Guilt of the Family in Business - https://link.springer.com/chapter/10.1007/978-3-658-48206-0_2

(3) Collective Guilt, Professional Identification, and Moral Business Practices - https://link.springer.com/chapter/10.1007/978-3-658-48206-0_3

(4) Predicting Collective Guilt and Behavioral Reactions - https://link.springer.com/chapter/10.1007/978-3-658-48206-0_4

(5) Pride in Family Businesses - https://link.springer.com/chapter/10.1007/978-3-658-48206-0_5

& Pride in family businesses: Authenticity, hubris, and cultural insights - https://www.sciencedirect.com/science/article/pii/S0148296324001012

Photo by Joanne Glaudemans via Unsplash