You should always hire based on merit, but NOT ONLY merit. You need to hire also based on "fit", in addition to merit. Does the candidate fit the company culture? Will they fit working with you?

To be clear: you should hire based on the COMBINATION of merit and fit.

And if you have difficulty assessing merit, hire a good organizational psychologist to assess your candidates. And hire that psychologist based on merit!

But if all you want is an excuse to do some mental masturbation on the topic of hiring based on merit, then here is something to lubricate your mind: what is actually "merit"? What are your criteria to define it?

Is ethics part of merit? How about being ruthless?

You will probably soon conclude that merit is important, yes... but it is only part of the equation when it comes to hiring people.