Environmental Performance Focus in Private Family Firms: The Role of Social Embeddedness

Abstract

We investigate if private family firms have a greater environmental performance focus than nonfamily firms, and if this relationship is moderated by the strength of the firms' social embeddedness. We empirically test these issues using a representative sample of 1452 private Australian small and medium-sized enterprises. Contrary to prevailing assumptions and previous indicative findings in the public firm context, our results show that family firms have a lower environmental performance focus than nonfamily firms. However, in cases where the firm is highly embedded in the social community, we find that family firms have a higher environmental performance focus. We explain our unexpected results by considering the role of financial risk in publicly held family firms. Accordingly, we posit that prior findings in the public firm context may be evidence of families expropriating wealth from nonfamily shareholders rather than altruistic pro-environmental behavior.

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

“…Within the wide range of information covered by corporate social responsibility reporting (e.g., social and environmental), strong interest has been documented in recent years in environmental information because of increased stakeholder pressure on firms' environmental performance (Ramanathan, ). Although most of the previous literature has focused on the relationship between environmental and firm performance (e.g., Han, Lin, Wang, Wang, & Jiang, ; Lee, Cin, & Lee, ; Molina‐Azorín, Claver‐Cortés, López‐Gamero, & Tarí, ; Xie, Nozawa, Yagi, Fujii, & Managi, ; Yadav, Han, & Rho, ), there is ongoing academic debate about the determinants of environmental performance (e.g., Dekker & Hasso, ). Specifically, firm ownership structure—the difference between family and nonfamily blockholders—is considered one of the most relevant dimensions, owing to family ownership penetration in listed companies in both developed and developing countries.…”

Family business and regional development—A theoretical model of regional familiness

“…Such behavior could affect regional processes such as the dynamics of economic exchange within the space. For instance, the competition dynamic process resulting from individuals sharing common spaces within local society may affect the ease of economic transactions; the cost of such transactions (by reducing resources required to control parties' opportunistic behavior) (Ding & Wu, 2014); the competition/cooperation among agents (by facilitating the flow of information and resources); the quality and quantity of knowledge flow (Menzel, 2005); and, at the firm level, access to scarce resources (Khanna & Rivkin, 2000), firm performance (Miller, Lee, Chang, & Le Breton-Miller, 2009) and environmental performance (Dekker & Hasso, 2014).…”

Symbolic reactions or substantive pro‐environmental behaviour? An empirical study of corporate environmental performance under the government's environmental subsidy scheme

“…Firms with higher profits are more capable of investment activities that can improve CEP (Stefan & Paul, ), ultimately solving environmental problems effectively (Dekker & Hasso, ). We use the net profit rate (net profit divided by the average total assets) as the measure.…”