Nepotism is the favouring of relatives and friends for positions of influence or employment. A particularist spirit in economic activities and in public life, which places personal loyalties and obligations to kin and friends above other considerations, may clash with the demands of industry. It may foster extreme practices of nepotism – such as putting relatives on the payroll even though they are incompetent or do not report for work – which may have a crippling effect on a small industrial undertaking and seriously reduce the efficiency of even the largest enterprise. Inimical to efficiency in most circumstances, such practices may have a detrimental effect on the development of industry.
In an efficient industrial enterprise, the basic criteria for the recruitment of personnel and the assignment of tasks must be the ability to do the required work and a sense of responsibility in performance. The admission of exceptions may mean the difference between success and failure.
Nepotism is publicly fostered in the form of personality politics which favour a family name. Political dynasties have included the Kennedy family in the USA, the Gandhi family in India and the Aquino family in the Philippines.
In the Romanian administration of Nicolae Ceausescu, as many as 50 of his relatives worked in government, including three brothers and a son who were ministers, and his wife, who was his deputy. It is reported that in China family members of top government leaders play a leading role in the Chinese military-industrial complex, and notably in the arms production industry. Consequently, the West's arms-control debates with China represent the confrontation of international law with national and political family ties.
One of the Commissioners in the European Commission which resigned wholesale in 1999 under charges of corruption, hired as her well-paid but unqualified "scientific visitor" a friend with whom she shared an address.
Directors of United Nations bodies have frequently been accused of putting personal or national politics ahead of international welfare.