How Does Corporate Governance Deviance Impact Sustainability in Family Firms? A Stakeholder Perspective

Irfan Saleem (), Muhammad Naeem, Muhammad Haseeb, Hao Ji and Said Fazari
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Irfan Saleem: Sohar University Oman
Muhammad Naeem: Modern College of Business and Science
Muhammad Haseeb: Middle East College
Hao Ji: Northwest A&F University
Said Fazari: Sohar University Oman

Circular Economy and Sustainability, 2025, vol. 5, issue 4, 2829-2842

Abstract: Abstract The first two decades of this century have witnessed a burst of legislation, court cases, and shareholder reform movements for multinational corporations. However, family firms usually deviate while practicing governance and sustainability-related business practices. This study aimed to shed light on why family firms adopt a deviant corporate governance attitude. By looking at the governance score of the family firms, we implement the Generalized Method of Moment (GMM) approach to find the relationship between the family firms’ corporate governance deviance index score. The findings demonstrate how deviance in corporate governance and deviance in family firms could influence sustainability performance. Our research supports the view that even in the presence of market- or country-based corporate governance laws and rules, the family firm usually develops governance practices that better balance its sustainability and profitability objectives. The study has implications for board members of family firms and theoretical implications for family business literature.

Keywords: Corporate governance; Family business; Sustainability; Socio-emotional wealth; Stakeholder theory (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s43615-025-00538-y

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