Environmental investment decisions of family firms—An analysis of competitor and government influence

Abstract

Prior research suggests that family firms are more likely to engage in environmentfriendly practices. However, the source of this difference is less clear. This study investigates how environmental innovations and stakeholder pressure tradeoffs (specifically from competitors and government) are simultaneously evaluated within family and nonfamily firms. An experimental rating-based conjoint methodology was used to capture and analyze 1936 firm environmental innovation investment decisions. The results indicate that firms were significantly more likely to invest in an environmental innovation that helped reduce regulatory oversight, and less likely to do so when it leads to a negative reputation among their industry peers. The findings also suggest that while firms will make an environmental innovation investment decisions to keep the government close, they are much more likely to avoid these investments if doing so will negatively impact their reputation among their peers-thus keeping their competitors closer. However, the results also demonstrated that family firms who were highly engaged with their peers were significantly less influenced by the possibility of negative peer reputation repercussions when making investment decisions compared with other firms. This research contributes to the development of a more comprehensive theoretical synthesis among the fields of corporate social responsibility (CSR), family business, and stakeholder theory.

What to green: Family involvement and different types of eco‐innovation

“…Pollution prevention occurs when environmental problems emerge and are thus regarded as reactive environmental solutions (Lin, 2019). Firms can prevent regulatory threats from government authorities by engaging in this type of innovation, which is more important for family firms (Bendell, 2022).…”

Exploring the Relationship Between Family Involvement and Innovative Capability in Chinese Family SMEs: The Role of HR Redundancy

“…In contrast with decision-makers’ egocentric motivations in non-family businesses, some studies have noted that the altruism motivation of a family firm’s decision-maker could also affect the firm’s behaviors (Bendell, 2022). How those altruistic behaviors (e.g., job security for family firm employees) could affect family firms’ risk-taking preferences (e.g., employing innovative strategies) deserves further exploration, and it is an issue that will be investigated in this study.…”

Does Government-Led Publicity Enhance Corporate Green Behavior? Empirical Evidence from Green Xuanguan in China

“…So, the relationship between perceived green risk and corporate green behavior in previous studies is different. In the view of business benefits, some scholars think that taking green action will pay for extra costs [90,91], have a long-term return cycle [50,64,92], face uncertain obstacles from the current market [93], and so on. These will decrease the passion of corporations to take green transition.…”

“…Lin and Ho [64], Demirel et al [52] investigated that corporations having a higher expectation of implementing cost and longer investment return period were reluctant to take green practices under the environmental uncertainty. Bendell [93] mentioned an interesting behavior of family firms. Family firms always showed a high tendency to invest in environmental protection innovation to build a better tie with local governments and get less super.…”

“…Government-led publicity can enhance their green perception of green transition development by improving the perceived public policies. When corporations perceived a high degree of green requirement from the territorial government, they will take green actions because of legitimacy pressure [52,109], goodwill of building a tight relationship with their supervisors [93], or pervasive threat [110]. In conclusion, the perceived green intention of local government is assumed to be positive enhancing the corporate green behavior.…”