Are SMEs and family firms better at sustainable practices? See this week’s tidbits to read the latest research.
Do entrepreneurial SMEs perform better because they are more responsible?
Many scholars have investigated the direct impact of entrepreneurial orientation (EO) on performance, but this direct association seems both spurious and ambiguous because many parameters may have an indirect influence on this relationship.
The present study thus considers sustainable practices—environmental practices, social practices in the workplace (SPW), and social practices in the community (SPC)—as three probable mediators in the relationship between EO and performance, which is considered in terms of its financial and non-financial dimensions. The authors seek to show to what extent small- and medium-sized enterprises’ (SMEs) sustainable practices are useful assets, which are supported by EO, to improve performance.
Using a structural equation modelling approach, data collected from 406 French SMEs were tested against the model. Our findings reveal that EO has a positive impact on the implementation of sustainable practices and that SPW partially mediate the link between EO and performance. Taken together, these findings suggest that EO plays a role in indirectly promoting performance by enhancing certain human resource management practices.
Jean-Marie Courrent, Sonia Chassé and Waleed Omri. 2018. Do Entrepreneurial SMEs Perform Better Because They are More Responsible?
Journal of Business Ethics, 153(2), 317–336.
Effect of family control on environmental performance disclosure
We combine research on business groups with the socioemotional wealth approach from family firm research to examine how family control of business group firms affects voluntary disclosure of environmental performance information.
Theorizing that disclosing environmental performance information weakens the owning family’s control over its business group firm, but also generates reputational benefits, the authors expect family ownership and disclosure propensities to relate in a U-shaped way and, further, that this U-shape is accentuated for business group firms with a family CEO.
Analysis of longitudinal data on disclosure decisions of South Korean business group firms supports our theory and suggests that the effect of family control on environmental performance disclosure is neither good nor bad; instead, it depends on both the level of family ownership and whether a family CEO is in place.
The finding that disclosure propensities are greatest when family control of business group firms is most extensive is provocative: it suggests that the very element that often is seen to encourage inefficiencies and fraud in business groups—family ownership combined with family leadership—can also be leveraged to foster responsible behaviours.
Ann Terlaak, Seonghoon Kim and Taewoo Roh. 2018. Not Good, Not Bad: The Effect of Family Control on Environmental Performance Disclosure by Business Group Firms.
Journal of Business Ethics,153(4), 977–996.
Sense-making efficiency through “sustainability” reports
This paper explores the nature and antecedents of a unique “sustainability” reporting initiative developed within a large Australian family-run manufacturing company. In so doing, the paper responds to calls for empirical insight into how accounting can inform organisational objectives relating to sustainability.
Despite known flaws in the data, the company’s weekly sustainability reports had become a critical support to on-going sense-making, driven by deliberate strategies focused on resource efficiency, and understanding the business. While the contributions of these initiatives to broader global sustainability concerns were limited, the case provides insight into a well-intentioned and passionate journey towards the unknown of sustainability.
The case explains how management distinguished related activities from core economic objectives. What is important here is that the CEO availed space for management to explore the moral dimensions of corporate activity. There was opportunity to now enhance that space, by encouraging engagement with a broader range of stakeholders, and a broader range of sustainability impacts.
Matthew Egan. 2019. Sense-Making Resource Efficiency Through “Sustainability” Reports.
Journal of Business Ethics, 154(3), 797–812.
The influence of family firms and institutional owners on CSR performance.
Research on corporate social responsibility (CSR) has traditionally focused on managerial discretion and stakeholders’ influence. This study extends current research by addressing the effect of family firms and institutional owners on CSR performance, namely, CSR strengths and concerns.
Based on stewardship theory and the socioemotional wealth perspective, the authors propose that family firms are more likely to value CSR performance. Next, drawing from multiple agency theory, these scholars predict that institutional owners, unlike family owners, will influence a firm’s CSR performance differently.
The authors tested their hypotheses using a sample of 153 firms from 1994 to 2006 and found general support for these hypotheses. A higher percentage of family owned equity and the presence of a family CEO are found to increase CSR strengths, whereas transient institutional owners have an opposite effect.
The presence of a family CEO and founding family are found to reduce CSR concerns. Contrary to predictions, dedicated institutional owners are positively associated with CSR concerns.
Nai H. Lamb and Frank C. Butler. 2018. The Influence of Family Firms and Institutional Owners on Corporate Social Responsibility Performance.
Business & Society, 57(7), 1374-1406.
Trust and credibility in how family businesses do sustainability reporting
This paper examines the success of corporate communication in voluntary sustainability reporting. Existing studies have focused on the perspective of the communicators but lack an understanding of the perspective of information recipients to clearly evaluate this interactive communication process.
This paper looks at the issue of a credibility gap perceived by external stakeholders when they doubt the authenticity of communicated information due to the reporting company’s governance structure. The paper uses family businesses to exemplify the emergence of such a gap when outsiders become concerned about the potential agency problem of the integrated ownership and management controlled by a few members of the same family.
Following source credibility theory, these concerns raise a credibility gap associated with a family firm’s trustworthiness and goodwill, even if the family has the expertise to carry out sustainability reporting. The findings of two experimental studies indicate that family businesses suffer a greater credibility gap than non-family businesses. An external and independent assurance service can mitigate such gaps, especially when the service is comprehensive and targets family businesses.
The paper provides a complete view evaluating corporate communication by looking at the interaction between the communicating company and the information recipients.
Josh Wei-Jun Hsueh. 2018. Governance Structure and the Credibility Gap: Experimental Evidence on Family Businesses’ Sustainability Reporting.
Journal of Business Ethics, 153(2), 547–568.
SMEs in the MENA region: CSR perceptions and pride in membership
The aim of this research is to explore the process linking participative leadership to organisational identification. The study examines the relationship between participative leadership and internal CSR perceptions of employees and also investigates the role that pride in membership plays in the affiliation of CSR perceptions with organisational identification.
By studying these relationships, the paper aspires to contemplate new presumed mediators in the association of participative leadership with organisational identification as well as determine a possible novel antecedent of employee CSR perceptions. Empirical evidence is provided from data that was collected through a survey distributed to employees working for small- and medium-sized enterprises in three countries in the Middle East and North Africa regions, particularly the United Arab Emirates, Lebanon, and Tunisia.
Findings show that participative leadership leads to positive internal CSR perceptions of employees and that these CSR perceptions lead to pride in membership which, in turn, results in organisational identification. Implications of these findings are also discussed.
Sophie Lythreatis, Ahmed Mohammed Sayed Mostafa & Xiaojun Wang. 2019. Participative Leadership and Organizational Identification in SMEs in the MENA Region: Testing the Roles of CSR Perceptions and Pride in Membership.
Journal of Business Ethics, 156(3), 635–650.