Does family control explain why corporate social responsibility affects investment efficiency?

Abstract

Drawing on stakeholder and socioemotional wealth theories, we empirically examine the influence of corporate social responsibility performance on investment efficiency in family-controlled businesses versus non-family-controlled businesses. Our panel dataset consists of 190 Pakistani firms listed on the Pakistan Stock Exchange over the period of 2007-2016. We use feasible generalized least square regression for model estimation. Our results suggest that firms with higher corporate social responsibility performance invest efficiently compared with firms with lower corporate social responsibility performance. Furthermore, the impact of corporate social responsibility performance on investment efficiency is higher in the family firms. The results suggest that family-controlled businesses are more willing to engage in social responsibility activities to achieve their non-economic goals, i.e. family image and trans-generational control. Overall, our results indicate that corporate social responsibility is beneficial for the organization, and its implication is more fruitful in the context of family-controlled businesses.

Family ownership and environmental performance: The mediation effect of human resource practices

“…Although the importance of family firms in worldwide economies is well recognized (e.g., Prencipe, Bar‐Yosef, & Dekker, ), the relationship between family ownership involvement and a firm's level of sustainability has received less attention (Sharma & Sharma, ). Although most studies have focused on market strategy choices between family and nonfamily firms, there is a lack of agreement on nonmarket strategy choices and the extent to which family ownership leads to higher sustainability (e.g., Adomako, Amankwah‐Amoah, Danso, Konadu, & Owusu‐Agyei, ; Cruz, Larraza‐Kintana, Garcés‐Galdeano, & Berrone, ; Shahzad, Rehman, Nawaz, & Nawab, ). Several literature reviews contain inconsistent and sometimes contradictory results (e.g., Van Gils, Dibrell, Neubaum, & Craig, ) on the relationship between family ownership and environmental practice and performance.…”

“…Although most studies have focused on market strategy choices between family and nonfamily firms, there is a lack of agreement on nonmarket strategy choices and the extent to which family ownership leads to higher sustainability (e.g., Adomako, Amankwah-Amoah, Danso, Konadu, & Owusu-Agyei, 2019;Cruz, Larraza-Kintana, Garcés-Galdeano, & Berrone, 2014;Shahzad, Rehman, Nawaz, & Nawab, 2018). Several literature reviews contain inconsistent and sometimes contradictory results (e.g., Van Gils, Dibrell, Neubaum, & Craig, 2014) on the relationship between family ownership and environmental practice and performance.…”

Can Environmental Corporate Social Responsibility Reduce Firms’ Idiosyncratic Risk? Evidence From China

“…Firms need to reconcile all main stakeholders to gain a competitive advantage (Jones, 1995). High-quality ECSR not only can meet the information needs of stakeholders, but also promote the establishment of a strong relationship between firms and stakeholders (Orlitzky and Benjamin, 2001;Connelly et al, 2011;Salama et al, 2011;Shahzad et al, 2018). The possibility of hiding harmful environmental information is significantly reduced under the joint supervision of stakeholders, and the transparency of information is improved.…”

CSR permanency, family ownership, and firm value: Evidence from emerging economies

“…Long‐term orientation is a special aspect of family firms that help them to accomplish financial and non‐financial goals (Broccardo, Truant, & Zicari, 2019; Gómez‐Mejía, Haynes, Núñez‐Nickel, Jacobson, & Moyano‐Fuentes, 2007). To achieve financial objectives, the long‐term orientation of family firms is particularly reflected in longer tenures of chief executive officers (Lansberg, 1999), usage of patient capital (Sirmon & Hitt, 2003), and longer time horizon for financial gains (Shahzad, Rehman, Nawaz, & Nawab, 2018; Zellweger, 2007). Beyond financial gains, family firms have non‐financial objectives to preserve socio‐emotional wealth (Gómez‐Mejía et al, 2007; Laguir, Laguir, & Elbaz, 2016), and passing on the business to successive generations (Miller, Le Breton‐Miller, & Scholnick, 2008).…”