The Main Drivers for Sustainable Decisions in a Family Business That Impact the Company’s Performance

Abstract

The successful ways in which families have conducted their businesses decade after decade have drawn scholars’ attention to what the mainstream ideas are when it comes to making sustainable decisions. This article focuses on the main drivers behind sustainable decisions made by family businesses with respect to three pillars: economic, environmental, and social. In this context, the authors’ aim is to present a statistical model for forecasting companies’ future revenue in the next financial year by analyzing the relationship between the main internal drivers of family businesses and their corresponding financial objectives. Additionally, the analysis of the long-term strategy and the short-term actions indicates an understanding of environmental awareness. Reaction time in investment decisions represents a challenge for the sustainable performance of family companies. Human resources with good operation management in family businesses contribute to the assurance of long-term business stability and high returns on investments. The results will contribute to the literature on economic sustainability of family businesses.

The Importance of the Governance Role in Achieving Stability and Sustainability in Family Business Companies Through Generations

“…However, corporate governance becomes a framework for dealing with these dynamics by matching individuals with responsibilities and affirming the supremacy of the firm. Good corporate governance is responsible for ensuring that family businesses outperform other forms of enterprises when adopting economic changes and decision-making (Cioca et al, 2020). Notably, family businesses with good governance are in a position to leverage opportunities by taking advantage of family legacy, shareholder structure, and risk-aversion orientation (Alwadani & Ndubisi, 2019).…”

“…This governance framework is characterized by a quick reaction time which is the main driver for success for these enterprises. Essentially, family business managers are quick to think twice about investment choices by deploying detailed management analysis to determine the efficacy of alternatives (Cioca et al, 2020). Evidence indicates that family business governance and leadership approaches pave the way for creating enterprises with long-term investment capability, thus paving the way for sustainability and stability for subsequent generations.…”

Intergenerational Differences in Family Business Management and Their Influence on Business Profitability

“…This paper focused on one of the characteristics of family businesses: their long-term orientation (LTO) to maintain control and transfer it to the following generations [2]. In this way, family businesses intend to achieve their economic sustainability over time [3]. LTO in family businesses includes the development of three dimensions: futures, continuity, and perseverance.…”