The Psychological Sustainability of Family Firms: Work–Family Spillover and Organizational Trust in an Italian Manufacturing SME

Background: Family firms are a pillar of most national economies, yet the overlap between family and business systems that defines them is also a source of affective strain and group-level tension that can spread across both domains. Sustainable organization management in family firms therefore depends not only on economic performance but on how governance, succession, and daily relational dynamics are managed psychologically. This study examines how the psychological blurring of family and work boundaries affects governance, succession readiness, and employee well-being in a small Italian family-owned manufacturing firm. Methods: A mixed-methods design combined semi-structured interviews with family members active in management (analyzed using conventional qualitative content analysis) with a structured survey administered to non-family employees, measuring supervisor and coworker support, perceived nepotism, organizational trust, organizational identification, burnout, turnover intention, self-rated performance, and job satisfaction. Results: Family members described persistent, largely unmanaged spillover between generational conflict over innovation, decision-making authority, and an informally anticipated but never formalized succession. Employees, by contrast, reported a generally positive climate, but perceived nepotism—although low on average—was consistently associated with lower organizational trust. Conclusions: Family-level emotional dynamics and employee-level perceptions of fairness constitute two only partly overlapping sources of risk to the sustainable management of small family firms, with direct implications for succession planning and human resource practices.