When Does Family Ownership Promote Proactive Environmental Strategy? The Role of the Firm’s Long-Term Orientation

Abstract

This research proposes an explanation for the conflicting extant evidence about whether family ownership of a business promotes proactive environmental strategy (PES). Based on insights drawn from strategic reference point theory, organizational identity theory, and the socioemotional wealth preservation perspective, we propose that family ownership has a moderated–mediated relationship with PES, with commitment as a moderator and long-term orientation as a mediator. A test using 454 China private firms with different levels of family ownership supports the hypotheses. This shows that PES as a strategy related to business ethics does not happen without commitment and long-term orientation.

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Fig. 1
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Notes

  1. 1.

    We would like to emphasize this is not a study about family firms. Instead, it is about owner identity’s, specifically family ownership’s, influence on firm behavior. There is a consensus that family ownership does not, by itself, make a firm a family firm. For example, researchers, when identifying family firms, add to ownership: family management, the intention for intrafamily succession (Chua et al. 1999), involvement of multiple family generations (Shanker and Astrachan 1996), or self-identification as a family firm (Westhead and Cowling 1998).

  2. 2.

    Earlier studies tend to call this configuration of conditional indirect effect mediated moderation rather than moderated mediation (Baron and Kenny 1986; Muller et al. 2005). However, we test the model using the PROCESS outlined by Preacher et al. (2007) and adopt their label of moderated mediation.

  3. 3.

    As a not-for-profit organization, the China Federation of Industry and Commerce oversees all private firms in China, with branch offices located in each province. Each branch office has established a close relationship with local government bodies and corporations. Such a close relationship largely contributed to the high response rate of this study.

  4. 4.

    The macro is downloaded from www.afhayes.com.

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Acknwledgements

The authors would like to thank the editor, Professor Cory Searcy, and two anonymous reviewers for their helpful and constructive comments. We also thank Professor Jess Chua for his comments and suggestions on the earlier versions of this paper. Errors of omission or commission remain our responsibility.

Funding

This study was funded by the National Natural Science Foundation of China [Grant Numbers 71372059; 71672173; 71402164].

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Correspondence to Song Wang.

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Dou, J., Su, E. & Wang, S. When Does Family Ownership Promote Proactive Environmental Strategy? The Role of the Firm’s Long-Term Orientation. J Bus Ethics 158, 81–95 (2019). https://doi.org/10.1007/s10551-017-3642-z

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Keywords

  • Family commitment
  • Family ownership
  • Long-term orientation
  • Proactive environmental strategy
  • Socioemotional wealth
  • Strategic reference point