Family firms as agents of sustainable development: A normative perspective

The reasons as to why family firms engage in corporate sustainability (CS) are poorly understood. In particular, those conditions that lead to a normative CS motivation, in which firms are driven by a sense of ethical responsibility, remain a theoretical black box. By integrating different theoretical explanations from research into family firms, CS and corporate governance, this study opens the black box and explains the interplay between family and firm antecedents, and how this affects normative CS motivation and hence CS performance. We empirically tested our hypotheses using survey-based data from a sample of 356 private family firms operating in Germany, Austria and Switzerland. Results of the structural equation model show that counteracting effects exist within a family firm, which influence CS motivation, thus providing a nuanced answer to the inconsistent findings of previous research, regarding the direction and magnitude of family influence on CS performance. Our findings help clarify that, as owners, family members are likely to adopt a normative CS motivation driven by socioemotional considerations. However, as managers responsible for the firm's economic success, family members become risk-averse to the introduction of CS initiatives for normative reasons, because they bear the residual risk of management decisions.

Automated summary

The motivations behind family firms engaging in corporate sustainability are complex and influenced by both family dynamics and internal governance structures of the firm. The study found that there are counteracting effects within family firms that impact the drive for sustainability, providing a nuanced explanation for the inconsistent findings in prior research.