I would take point #2 a step further. These types of environments breed cliques. These cliquish groups will unite based on social similarities that are not work

I would take point #2 a step further. These types of environments breed cliques. These cliquish groups will unite based on social similarities that are not work related. The elements on which they will unite will effect their working relationships. Those who are part of the clique will facilitate each other's projects. The problem comes only when there are people that are outside of the clique. Those who are outside of the clique thus be ostracized. Their projects will be held back in order to feed the power of the clique. The social friendships will become the decisive power in the company. This power is stronger than the CEO's. New employees will quickly see the unspoken pecking order. They will have to acquiesce or be at a huge disadvantage. Such is the nature of cliques inside of a supposedly flat hierarchy. Families are generally flat hierarchies and thus can succumb to these kinds of clique problems.