How Does Family Involvement Affect Environmental Innovation? A Socioemotional Wealth Perspective

Joohee Han, Juil Lee and Sang-Joon Kim
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Joohee Han: Department of Business Administration, Gachon University, Seongnam-si 13120, Korea
Juil Lee: Department of Business Administration, University of Ulsan, Ulsan 44610, Korea
Sang-Joon Kim: Ewha School of Business, Ewha Womans University, Seoul 03760, Korea

Sustainability, 2021, vol. 13, issue 23, 1-12

Abstract: The purpose of this study was to examine how family involvement affects the environmental innovation of firms. While prior studies have shown that family involvement can enhance environmental performance, these environmental performances have been portrayed as firm activities to prevent environmental issues, such as air pollution, CO 2 emissions, etc. We maintain that environmental performance should be more proactive and enable firms to transform their activities more fundamentally towards environmental protection. In this sense, we consider environmental innovation, i.e., technological development to address environmental issues, as a proactive measure enacting firm activities to address environmental issues. Furthermore, we determine whether and how family involvement can motivate firms to develop technologies for environmental performance. To illuminate this relation, we utilized a socioemotional wealth perspective, which provides useful insights into how family-controlled firms behave differently in comparison to non-family firms. Building on this socioemotional wealth approach, we suggest that family involvement helps firms engage in environmental innovation. In this study, we also explore how the positive link between family involvement and environmental innovation is dependent on family interlocks—the circumstance wherein a firm’s family directors are affiliated with the boards of directors of other firms. Specifically, we suggest that an increase in a firm’s family interlocks would strengthen the positive relationship between family involvement and environmental innovation. To test our ideas, we used a sample of 623 US public firms ranging from 1996 to 2010, which yielded 5047 firm-year observations. We find that family involvement facilitates the environmental innovation of firms. We also find that family interlocks intensify the positive effect of family involvement on environmental innovation. Finally, we discuss the theoretical and empirical implications of our results.

Keywords: family involvement; socioemotional wealth; environmental innovation; family interlocks (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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