For a business purposes, part of the benefit of "that family thing" is that it would tend to make employees less likely to jump ship because of a personal connection and bond.

This is also the reason why in business (the reverse example) it's important (generally and depending on the circumstances) to keep an arms length relationship. If your brother in law is, for example, the contractor doing work and renovating your home, your hands are tied more than if it's someone that you don't have a personal connection to. Weighed against the potential upside of getting a bad job from someone who has no relationship with you at all of course. (Details and the parties involved matter as with anything).