Abstract
This study investigates the engagement of family firms in corporate social responsibility. We first compare their corporate social performance (CSP) to non-family firms. Then, following recent evidence on the heterogeneity of family firms, we examine two factors that may influence CSP within family firms: the level of family control and the governance orientation of the country in which they operate. This research is based on a theoretical framework which considers both agency and socioemotional wealth (SEW) influences on family firms CSR engagements. Overall, we find that family firms exhibit lower CSP than non-family firms. But when focusing on family firms, our analyses show a curvilinear relationship between family control and CSP. At lower levels of control, family owners invest more in social initiatives to protect their SEW. Beyond a threshold level of control that we estimate at 36 % in our sample, economic considerations prevail over SEW and social performance starts decreasing. We also find that family firms operating in stakeholder-oriented countries are more attentive to social concerns than those operating in more shareholder-oriented countries.
Similar content being viewed by others
Notes
Barnea and Rubin (2010) argue that corporate social performance should be positively related to the expenditure level on CSR initiatives. Furthermore, they contend that the association between socially responsible expenditures and firm value is non-monotonic (page 72). At lower levels of spending, CSR should positively affect firm financial performance and valuation. But, beyond a certain level, managers may be seen as over-investing in CSR.
We are grateful to an anonymous reviewer who pointed at this possibility and suggested this approach.
All statistical analyses were conducted with the Stata software.
For robustness check, we also ran weighted least squares (WLS) and generalized linear model (GLM) regressions and obtained similar results.
As a robustness check, we also run the regression on the non-family subsample and found the results to be similar.
References
Anderson, R. C., & Reeb, D. M. (2003). Founding-family ownership and firm performance: Evidence from the S&P 500. Journal of Finance, 58, 1301–1329.
Arregle, J. L., MA, Hitt, Sirmon, D. G., & Very, P. (2007). The development of organizational social capital: Attributes of family firms. Journal of Management Studies, 44(1), 73–95.
Ball, R., Kothari, S. P., & Robin, A. (2000). The effect of international factors on properties of accounting earnings. Journal of Accounting and Economics, 29, 1–51.
Barnea, A., & Rubin, A. (2010). Corporate social responsibility as conflict between shareholders. Journal of Business Ethics, 97, 71–86.
Barontini, R., & Caprio, L. (2006). The effect of family control on firm value and performance: Evidence from continental Europe. European Financial Management, 12(5), 689–723.
Berle, A. A., & Means, G. G. C. (1932). The modern corporation and private property. Piscataway: Transaction Books.
Berrone, P., Cruz, C., & Gómez-Mejía, L. R. (2012). Socioemotional wealth in family firms: Theoretical dimensions, assessment approaches, and agenda for future research. Family Business Review, 25, 258–279.
Berrone, P., Cruz, C., Gomez-Mejia, L. R., & Larraza-Kintana, M. (2010). Socioemotional wealth and corporate responses to institutional pressures: Do family-controlled firms pollute less?’. Administrative Science Quarterly, 55, 82–113.
Bingham, J. B., Dyer, W. J., Smith, I., & Adams, G. L. (2011). A stakeholder identity orientation approach to corporate social responsibility in family firms. Journal of Business Ethics, 95(4), 565–585.
Blair, M. M. (1995). Ownership and control: Rethinking Corporate governance for the twenty-first century. Washington: Brookings.
Campbell, J. L. (2007). Why would corporations behave in socially responsible ways? An institutional theory of corporate social responsibility. Academy of Management Review, 32(3), 946–967.
Carney, M. (2005). Corporate governance and competitive advantage in family controlled firms. Entrepreneurship Theory and Practice, 29(3), 249–265.
Cennamo, C., Berrone, P., Cruz, C., & Gomez-Mejia, L. (2012). Socioemotional wealth and proactive stakeholder engagement: Why family-controlled firms care more about their stakeholders? Entrepreneurship, Theory and Practice, 36(6), 1153–1173.
Cennamo, C., Berrone, P., & Gomez-Mejia, L. (2009). Does stakeholder management have a dark side? Journal of Business Ethics, 89, 491–507.
Cespa, G., & Cestone, G. (2007). Corporate social responsibility and managerial entrenchment. Journal of Economics and Management Strategy, 16, 741–771.
Chrisman, J. J., & Patel, P. C. (2012). Variation in R&D investments of family and non family firms: Behavioral agency and myopic loss aversion perspectives. Academy of Management Journal, 55(4), 976–997.
Chua, J. H., Chrisman, J. J., Steier, L. P., & Rau, S. B. (2012). Sources of heterogeneity in family firms: An introduction. Entrepreneurship : Theory and Practice, 36(6), 1103–1113.
Coase, R. H. (1960). The problem of social cost. Journal of Law and Economics, 3, 1–44.
Davis, G. F., & Greve, H. R. (1997). Corporate elite networks and governance changes in the 1980s. American Journal of Sociology, 103, 1–37.
Demsetz, H. (1967). Toward a theory of property rights. The American Economic Review, 57(2), 347–359.
Demsetz, H., & Villalonga, B. (2001). Ownership structure and corporate performance. Journal of Corporate Finance, 7, 209–233.
Déniz, M. D. L. C. D., & Suárez, M. K. C. (2005). Corporate social responsibility and family business in Spain. Journal of Business Ethics, 56(1), 27–41.
Donaldson, T., & Preston, L. (1995). The stakeholder theory of the corporation: Concepts, evidence, and implications. Academy of Management Review, 20(1), 65–91.
Dyer, W. G, Jr. (2006). Examining the “family effect” on firm performance. Family Business Review, 19, 253–273.
Dyer, W. G, Jr, & Whetten, D. A. (2006). Family firms and social responsibility: Preliminary evidence from the S&P 500. Entrepreneurship Theory and Practice, 30(6), 785–802.
Faccio, M., & Lang, L. H. P. (2002). The ultimate ownership of western European corporations. Journal of Financial Economics, 65, 365–395.
Galaskiewicz, J. (1997). An urban grants economy revisited: Corporate charitable contributions in the Twin Cities, 1979–81, 1987–1989. Administrative Science Quarterly, 42, 445–471.
Gedajlovic, E., Carney, M., Chrisman, J. J., & Kellermans, F. W. (2012). The adolescence of family-firm research: Taking stock and planning for the future. Journal of Management, 38(4), 1010–1037.
Godfrey, P. C. (2005). The relationship between corporate philanthropy and shareholder wealth: A risk management perspective. Academy of Management Review, 30(4), 777–798.
Gomez-Mejia, L. R., Cruz, C., Berrone, P., & De Castro, J. (2011). The binds that ties: Socioemotional preservation in family firms. Academy of Management Annals, 5, 653–707.
Gómez-Mejía, L. R., Haynes, K. T., Núñez-Nickel, M., Jacobson, K. J. L., & Moyano-Fuentes, J. (2007). Socioemotional wealth and business risks in family-controlled firms: Evidence from Spanish olive oil mills. Administrative Science Quarterly, 52, 106–137.
Graves, S. B., & Waddock, S. A. (1994). Institutional owners and corporate social performance. Academy of Management Journal, 37(4), 1034–1046.
Griffin, J. J., & Mahon, J. F. (1997). The corporate social performance and corporate financial performance debate. Business and Society, 36(1), 5–31.
Guthrie, D. (2003). Survey on corporate-community relations. New York: Social Sciences Research Council.
Handler, W. C. (1994). Succession in family business: A review of the research. Family Business Review, 7(2), 133–157.
Heath, G., & Norman, W. (2004). Stakeholder theory, corporate governance and public management: What can the history of state-run enterprises teach us in the post-enron era? Journal of Business Ethics, 53(3), 247–267.
Hill, C. W. L., & Jones, T. M. (1992). Stakeholder-agency theory. Journal of Management Studies, 29(2), 131–154.
Jensen, M. C., & Meckling, M. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3, 305–360.
Kellermanns, J. J., Eddleston, K. A., & Zellwegger, T. M. (2012). Extending the socioemotional wealth perspective: A look at the dark side. Entrepreneurship Theory and Practice, 36(6), 1175–1182.
La Porta, R., Lopez-De-Silanes, F., & Shleifer, A. (1999). Corporate ownership around the world. Journal of Finance, 54(2), 471–517.
La Porta, R., Lopez-De-Silanes, F., Shleifer, A., & Vishny, R. W. (1998). Law and finance. Journal of Political Economy, 106(6), 1113–1155.
Le Breton, M. L., & Miller, D. (2006). Why do some family businesses out compete? Governance, long term orientations, and sustainable capability. Entrepreneurship Theory and Practice, 30(6), 731–746.
Marques, P., Presas, P., & Simon, A. (2014). The heterogeneity of family firms in CSR engagement: The role of values. Family Business Review, 27(3), 206–227.
Maury, B. (2006). Family ownership and firm performance: Empirical evidence from western European corporations. Journal of Corporate Finance, 12, 321–341.
McWilliams, A., & Siegel, D. (2000). Corporate social responsibility and financial performance: Correlation or misspecification? Strategic Management Journal, 21, 603–609.
Miller, D., Le Breton-Miller, I., Lester, R. H., & Canella, A. A, Jr. (2007). Are family firms really superior performers? Journal of Corporate Finance, 13, 829–858.
Miller, D., Le Breton-Miller, I., & Lester, R. H. (2013). Family firm governance, strategic conformity and performance: Institutional vs. strategic perspectives. Organization Science, 24(1), 189–209.
Morck, R., & Yeung, B. (2004). Family control and the rent-seeking society. Entrepreneurship, Theory and Practice, 28(4), 391–409.
Neubaum, D. O., & Zahra, S. A. (2006). Institutional ownership and corporate social performance: The moderating effects of investment horizon, activism, and coordination. Journal of Management, 12(1), 108–131.
Orlitzky, M., Schmidt, F. L., & Rynes, S. L. (2003). Corporate social and financial performance: A meta-analysis. Organization Studies, 24(3), 403–441.
Peng, M. W., & Jiang, Y. (2010). Institutions behind family ownership and control in large firms. Journal of Management Studies, 47(2), 253–273.
Preston, L. E., & O’Bannon, D. P. (1997). The corporate social-financial performance relationship: A typology and analysis. Business and Society, 36, 419–429.
Prior, D., Surroca, J., & Tribó, J. A. (2008). Are socially responsible managers really ethical? Exploring the relationship between earnings management and corporate social responsibility. Corporate Governance: An International Review, 16(3), 160–177.
Sánchez-Ballesta, J. P., & García-Meca, E. (2007). A meta-analytic vision of the effect of ownership structure on firm performance. Corporate Governance: An International Review, 15(5), 879–893.
Scott, R. W. (2008). Institutions and Organizations: Ideas and Interests (3rd ed.). Los Angeles: Sage Publication.
Sharma, P., Chrisman, J. J., & Gersick, K. E. (2012). 25 years of family business review: Reflections on the past and perspective for the future. Family Business Review, 25(1), 5–15.
Sharma, P., & Sharma, S. (2011). Drivers of proactive environmental strategy in family firms. Business Ethics Quarterly, 21(2), 309–334.
Shleifer, A., & Vishny, R. W. (1997). A survey of corporate governance. Journal of Finance, 52, 737–783.
Smith, B., & Amoako-Adu, B. (1999). Management succession and financial performance of family controlled firms. Journal of Corporate Finance, 5, 341–368.
Stout, L. A. (2002). Bad and not-so-bad arguments for shareholder primacy. Southern California Law Review, 75(5), 1189–1209.
Surroca, J., & Tribó, J. (2008). Managerial entrenchment and corporate social performance. Journal of Business Finance and Accounting, 35(5/6), 748–789.
Surroca, J., Tribó, J., & Waddock, S. (2010). Corporate responsibility and financial performance: The role of intangible resources. Strategic Management Journal, 31(5), 463–490.
Useem, M. (1988). Market and institutional factors in corporate contributions. California Management Review, 30(2), 77–88.
Van der Laan Smith, J., Adhikari, A., & Tondkar, R. H. (2005). Exploring differences in social disclosures internationally: A stakeholder perspective. Journal of Accounting and Public Policy, 24(2), 123–151.
Villalonga, B., & Amit, R. (2006). How do family ownership, control and management affect firm value? Journal of Financial Economics, 80(2), 385–417.
Waddock, S. A., & Graves, S. M. (1997). The corporate social performance-financial performance link. Strategic Management Journal, 18(4), 303–319.
White, H. (1980). A heteroskedasticity-consistent covariance matrix estimator and a direct test for heteroskedasticity. Econometrica: Journal of the Econometric Society, 48(4), 817–838.
Wiklund, J. (2006). Commentary: “Family firms and social responsibility: Preliminary evidence from the S&P 500”. Entrepreneurship Theory and Practice, 30(6), 803–808.
Wright, M., Chrisman, J. J., Chua, J. H., & Steier, L. P. (2014). Family enterprise and context. Entrepreneurship Theory and Practice, 38(6), 1247–1260.
Zellweger, T. M., Kellermanns, F. W., Chrisman, J. J., & Chua, J. H. (2012). Family control and family firm valuation by family CEOs: The importance of intentions for transgenerational control. Organization Science, 23(3), 851–868.
Acknowledgments
All authors contributed equally to this study. We gratefully acknowledge financial support from the Stephen A. Jarislowsky Chair in Governance, the Institute of Governance in Public and Private Organizations, the Walter J. Somers Chair, and the CPA Canada Accounting and Governance Research Centre at the University of Ottawa. The usual caveat applies.
Author information
Authors and Affiliations
Corresponding author
Additional information
Réal Labelle is Honorary Professor at HEC Montréal.
Appendix: SiriPro CSR dimensions
Appendix: SiriPro CSR dimensions
A. Business ethics |
A.1. Public reports and communications |
Public reporting on business ethics issues |
Public reporting externally verified |
A.2. Principles and policies |
Formal policy statement on bribery and corruption |
Formal policy statement on money laundering |
A.3. Management systems |
Whistle blower programs |
B. Community |
B.1. Public reports and communications |
Public reporting on community issues |
Public reporting externally verified |
B.2. Principles and policies |
Formal policy statement on operation in sensitive countries |
Formal policy statement on origin of coltan |
Formal policy statement on human rights and security forces |
Public position statement on access to economic opportunity |
Public position statement on access to basic needs |
B.3. Management systems |
Guidelines for philanthropic activities |
Independent assessment of community projects in developing count |
Formal programs for engagement or consultation with communities |
Targets and programs for community reinvestments |
B.4. Performance |
Percent donations |
Primary areas of support |
Actual disclosure of payments (EITI) |
Micro-finance activities |
C. Corporate governance |
C.1. Public reports and communications |
Directors’ biographies |
Directors’ and/or CEO’s remuneration/compensation |
C.2. Principles and policies |
Formal policy statement on remuneration |
C.3. Management systems |
Separate position for chairman of board and CEO |
Number of independent NEDs in the board (and %) |
Audit committee composition |
Remuneration/compensation committee composition |
Variable remuneration linked to sustainability performance |
C.4. Performance |
The company adheres to the one share, one vote principle |
% Non-audit fees of audit fees |
D. Customers |
D.1. Public reports and communications |
Public reporting on customers issues |
Public reporting externally verified |
D.2. Principles and policies |
Formal policy statement on quality or customer satisfaction |
Editorial policy |
Formal policy statement on advertising ethics |
Adherence to WHO ethical criteria for medicinal drug promotion |
Position statement on the use of GMOs |
Public position statement on debate over health consequences of food |
Public position statement on responsible marketing |
D.3. Management systems |
Percentage of ISO 9000-certified sites |
GMO labeling practice |
Drug safety monitoring for any product |
D.4. Performance |
Data on product recalls (for health/safety reasons) |
E. Employees |
E.1. Public reports and communications |
Public reporting on employees issues |
Public reporting externally verified |
E.2. Principles and policies |
Formal policy on freedom of association and right to collective bargaining |
Formal policy on elimination of discrimination |
Formal policy statement on HIV/AIDS |
Formal policy statement on minimum living wages |
Formal policy statement on maximum working hours |
E.3. Management systems |
Targets and programs to increase diversity in the workforce |
Targets and programs on health and safety |
Percentage of health and safety certification |
E.4. Performance |
Data on layoffs and job cuts |
Percentage of employees with fixed-term contracts |
Data on lost-time illness rate |
Data on lost-time incident rate |
Data on total number of fatalities |
F. Environment |
F.1. Public reports and communications |
Public reporting on environmental issues |
Public reporting externally verified |
F.2. Principles and policies |
Environmental policy |
Formal policy statement on green procurement |
Formal policy statement on use of certified forestry product |
Public position statement on transport and climate change |
Public position statement on energy mix |
F.3. Management systems |
Percentage of ISO 14001-certified sites |
Targets and programs for environmental improvement of suppliers |
Targets and programs for CO2 eq emission reduction and/or energy consumption |
Targets and programs to increase the use of renewable energy |
Targets and programs to reduce air emissions |
Targets and programs to reduce hazardous waste generation |
Targets and programs to reduce non-hazardous waste generation |
Targets and programs to reduce discharge to water |
Targets and programs to reduce water consumption |
Targets and programs to reduce material consumption |
Targets and programs to phase out use of hazardous substances |
Targets and programs to phase out CFC’s/HCFC’s in refrigeration equipment |
Targets and programs to replace chlorine bleaching |
Targets and programs to increase percentage of certified pulp/wood operations |
Targets and programs to increase use of environmentally friendly paper |
Targets and programs to improve the environmental performance of fleet and transport |
Targets and programs to reduce emissions of transport means |
Targets and programs to reduce the noise characteristics of transport |
Targets and programs to phase out production of hazardous substances |
Targets and programs to reduce the energy consumption of products |
Targets and programs to reduce the impact of product at the end of the production cycle |
Targets and programs to reduce the environmental toxicity of product |
Targets and programs to reduce packaging materials |
Targets and programs to increase the sale of eco-labeled/organic products |
Targets and programs to reduce CO2 eq emissions of the fleet |
Programs that offer favorable financial conditions for environmentally friendly projects |
Programs to take into account environmental impact of products in investment decision |
F.4. Performance |
Percentage of ISO 14001-certified suppliers |
Data on CO2 eq emissions |
Data on renewable energy consumption |
Data on air emissions |
Data on hazardous waste generation |
Data on non-hazardous waste |
Data on discharge to water |
Data on oil spills |
Data on water consumption |
Data on material consumption |
Data on percentage of certified pulp or wood of total consumption/production |
Data on percentage of recycled fiber as raw material |
Percentage of FSC paper |
Percentage of recycled paper used |
Percentage of renewable energy sold |
Data on assets managed according to SRI criteria |
Data on total amount of environmental fines and penalties |
Total land disturbed and not yet rehabilitated |
Percentage of sales from eco-labeled/organic products |
Environmentally friendly construction materials |
Environmentally friendly building products |
Products beneficial to the environment |
Percentage of loans with detailed environmental examination |
Percentage of environmentally oriented loans |
Percentage of transactions with detailed environmental examination |
Percentage of transactions with high environmental benefits |
Percentage of investments in non-listed pioneer companies with high environmental benefits |
Percentage of premium volumes or number of policies with environmental incentives |
G. Contractors |
G.1. Public reports and communications |
Public reporting on contractors issues |
Public reporting externally verified |
G.2. Principles and policies |
Formal policy statement on contractors and social issues |
Formal policy on core labor issues |
G.3. Management systems |
Monitoring systems to ensure compliance |
Translation and dissemination of the policy statements |
Labor issues form a clause in standard procurement contracts |
Targets and programs to increase the sale of fair-trade products |
G.4. Performance |
Data on number of non-compliance detected relative to number of suppliers |
Percentage of SA8000-certified suppliers |
Percentage of fair-trade products |
Rights and permissions
About this article
Cite this article
Labelle, R., Hafsi, T., Francoeur, C. et al. Family Firms’ Corporate Social Performance: A Calculated Quest for Socioemotional Wealth. J Bus Ethics 148, 511–525 (2018). https://doi.org/10.1007/s10551-015-2982-9
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10551-015-2982-9