Does socially responsible management make business sense for family firms? Read our research tidbits for insights.
Corporate social performance in family firms: A positive relationship
Empirical studies provide conflicting conclusions regarding the corporate social performance (CSP) of family firms. The purpose of this paper is to synthesise the existing empirical evidence and examine the potential role of research design and contextual factors.
A meta-analysis of existing empirical studies was performed to examine the role of sampling, measurement and contextual factors in explaining the different and often conflicting results of empirical studies in the family business literature.
Findings: The overall relationship between family firms and CSP is positive.
The relationship between family firms and CSP is positive for private family firms but is negative for public family firms. The relationship between family firms and CSP is positive when family involvement includes both family ownership and management as opposed to only family ownership or family management.
Private family firms care more and public family firms care less about the community, environment, and employees than private and public nonfamily firms. The relationship between family firms and CSP is stronger in institutional environments with weak labour and corporate governance regulatory frameworks.
Sergio Canavati, 2018. Corporate Social Performance in Family Firms: A Meta-Analysis.
Journal of Family Business Management, 8(3), 235-273.
Family business ethics at the crossroads?
In spite of the considerable development of research in the fields of business ethics and family business, a comprehensive review and integration of the area where both disciplines intersect has not been undertaken so far.
This paper aims at contributing to the call for more research on family business ethics by answering the following research questions: What is the status of the current research at the intersection of business ethics and family business? Why and how do family firms differ from non-family firms regarding business ethics? And, what are the key directions for further research?
To answer these questions, this study combines a systematic approach for the selection of articles, resulting in a sample of 31 articles over 35 years, with a narrative review to analyse the literature. This paper finds that research on family business ethics is scarce but increasing and that family firms are considerably different from non-family firms regarding ethical issues.
Particular stakeholders, goals, relationships, and practices are found to be the forces behind the peculiarity of family business ethics. Ultimately, research development on family business ethics is encouraged and future research directions flowing from the key findings and reflections of this review are provided.
Pedro Vazquez. 2018. Family Business Ethics: At the Crossroads of Business Ethics and Family Business.
Journal of Business Ethics, 150(3), 691–709.
Structuring financial and nonfinancial outcomes across the family and firm
Family firms are distinguished theoretically from nonfamily firms due to their pursuit of unique, family-related aspirations and goals. The pursuit of these aspirations and goals leads many family firms to define success or failure in terms of a broader set of outcomes than nonfamily firms.
Despite this, family firm research has generally taken a constricted view of family firm outcomes by concentrating on narrowly defined financial performance as measured by accounting and/or market-based indicators. The authors contend that this somewhat myopic focus has slowed the field’s development to some degree, by constraining the ability to test its fundamental tenets. To address this, the authors draw on several disciplines to systematically order family firm outcomes within a family firm(s) outcomes model that encompasses both financial and nonfinancial dimensions.
While financial performance is important in research and practice, herein the authors refer to both financial and nonfinancial outcomes and explain how these outcomes map on the family unit and the family firm. Furthermore, the authors suggest measures that can be used and explain how the model can be applied when researchers select financial and nonfinancial outcomes important to family members as the family firm’s success or failure is gauged.
Daniel T. Holt, Allison W. Pearson, Jon C. Carr, 2016. Family Firm(s) Outcomes Model: Structuring Financial and Nonfinancial Outcomes Across the Family and Firm.
Family Business Review, 30(2), 182-202.
Revisiting the effect of family involvement on CSR
This paper sheds light on the incongruent findings concerning the relationship between family involvement and firms’ corporate social responsibility (CSR). While prior studies have mainly taken the perspective of families’ socioemotional wealth preservation, the authors approach this relationship from the perspective of behavioural agency theory, highlighting the important role played by CEOs’ family memberships.
Specifically, the authors posit that family firms are more likely to invest in CSR when their CEOs are members of the controlling families. Furthermore, the authors examine how family firms can employ long-term incentives to encourage non-family CEOs to act in the interests of the controlling families to preserve SEW and thus enhancing family firms’ CSR performance.
The authors tested the hypotheses using hand-collected data of family firms included in the S&P 500 index, in the period of 2003–2010. The empirical findings support the hypotheses that (a) family firms with family members as the CEOs have better CSR performance and (b) family firms tend to provide a high level of long-term incentives to non-family than family CEOs.
In addition, long-term incentives strongly motivate CEOs to improve firms’ CSR performance, regardless of their family memberships.
Victor Cui, Shujun Ding, Mingzhi Liu and Zhenyu Wu. 2018. Revisiting the Effect of Family Involvement on Corporate Social Responsibility: A Behavioral Agency Perspective.
Journal of Business Ethics, 152(1), 291–309.
Environmental-social performance of family firms
Despite that family businesses are a group of heterogeneous companies with different levels of family involvement in the business, research has given little attention to these important contingencies when discussing family business environmental social performance.
Building on the socioemotional wealth (SEW) framework and using qualitative comparative analysis, the authors explore optimal configurations of governance antecedents that can catalyse the environmental social performance of family firms across Anglo-Saxon and non-Anglo-Saxon countries.
Findings reveal two governance configurations that, regardless of the institutional setting, can catalyse the environmental social performance of family firms:
1) the combination of 100% family ownership, first generation leadership, high family presence on the board, and low family involvement in management; and
2) the combination of 100% family ownership, first generation leadership, high family involvement in management, and the presence of outside directors on the board. Specific configurations for non-Anglo-Saxon countries are also identified. Theoretical and practical implications are discussed.
Georges Samara, Dima Jamali, Vicenta Sierra and Maria Jose Parada. 2018. Who are the best performers? The environmental social performance of family firms.
Journal of Family Business Strategy, 9(1), 33-43.
Socially responsible management makes sound business in the family firm
This paper examines the proposition that adopting a socially responsible, or philanthropic, management posture is not antithetic to the capitalist business model but rather can be seen as a sound approach to the development of long-term sustainability in business in a modern business environment, wherein a strand of corporate social responsibility is one core aspect of the composite utility function of the modern business.
The authors suggest further that for many of the prominent/significant examples of the successful adoption of a policy of informed benevolence in the management of employees that policy seems to be faith rooted – be that faith Christian, Buddhist, Jewish, Muslim or other. Indeed, even if one observed an organisation subject to an humanist or even atheistic based socially responsible management, one could see that as being rooted in that organisation’s ‘non-faith’ faith, or ethical bubble.
This argument also gives the lie to the proposition, in currency in some circles, that the term ‘business ethics’ is an oxymoron. To underpin the argument the authors cite examples (/set out mini-cases, or a mixture of these) from a range of faith based traditions including, Buddhism, the Quaker-Christian tradition, Judaism and Islam.
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M. John Foster. 2018. Socially Responsible Management as a Basis for Sound Business in the Family Firm.
Philosophy of Management, 17(2), 203–218.