Family ownership and control as drivers for environmental, social, and governance in family firms

Jiamu Sun (), Massimiliano Matteo Pellegrini (), Marina Dabic (), Kai Wang () and Cizhi Wang ()
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Jiamu Sun: Beijing Jiatong University
Massimiliano Matteo Pellegrini: Tor Vergata University
Kai Wang: Capital University of Economics and Business
Cizhi Wang: Capital University of Economics and Business

Review of Managerial Science, 2024, vol. 18, issue 4, No 3, 1015-1046

Abstract: Abstract Sluggish market demand can deteriorate the financial situation of a company and affect a shareholder’s decision to adopt environmental, social, and governance criteria (ESG). According to the socioemotional wealth theory, family firms place significant emphasis on sustainable development and long-term orientation, but this emphasis can be either internally or externally driven according to the type of involvement chosen by the owning family. Therefore, this study uses listed family firms to explore the relationship between different types of family involvement (i.e., family ownership and control, the influence of market competition, and the institutionalisation level of the environment in which a firm decides to pursue ESG criteria). We performed a multivariate regression analysis on a sample of 1,151 Chinese companies to test these relationships and found that both family ownership and control are positively related to ESG scores. Market competition negatively moderates the influence of both family ownership and control on the adoption of ESG criteria. Moreover, the influence of family control is negatively moderated by the institutional environment. Thus, types of family involvement seem to be relevant for the firm’s engagement with ESG criteria.

Keywords: ESG criteria; Family involvement; Family ownership; Family control; Socioemotional wealth theory (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s11846-023-00631-2

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