Abstract
The contradictory empirical evidence about whether the effect of companies' environmental investments on financial results is positive, negative or not significant has been explained by the different conditions and contexts that facilitate or hinder the ability to generate a win–win situation. This explanation has gradually led the academic debate to consider the factors and conditions that moderate such a relationship. In this document, we analyse the relevant but scarcely studied moderating effect of the condition of being a family firm, by integrating the socioemotional wealth (SEW) perspective into the natural-resource-based view (NRBV). Based on the analysis of panel data from 2936 Spanish manufacturing firms, covering the period 2009–2016, we offer empirical evidence showing that the financial benefits derived from environmental investment are positive and significant in family firms, while this is not so in non-family firms. Furthermore, our results show that intrinsic characteristics such as the sector, size or age of the company also condition the financial results of environmental investments.
Highlights
The growing concern for the natural environment over the last few decades is promoting green entrepreneurship and forcing companies to move away from the traditional narrow short-term approach, which limited their focus to their own financial objectives, and to broaden their interests to try to reduce the environmental impact of their activity (Melay and Kraus 2012; Endrikat et al 2014; Li et al 2017)
We have found only two studies—Craig and Dibrell (2006) and Huang et al (2014) —which explain that these distinctive characteristics of family firms favour the possibility of environmental investments translating into improved financial results, showing that the effectiveness of environmental proactivity for the firm’s financial results is greater in family firms than in non-family firms
Based on the socioemotional wealth (SEW) perspective, in this paper we argue that the condition of being a family firm represents a factor that favors the possibility of achieving a win–win situation through investments in environmental protection, which is a position in which both environmental and financial results are improved
Summary
The growing concern for the natural environment over the last few decades is promoting green entrepreneurship and forcing companies to move away from the traditional narrow short-term approach, which limited their focus to their own financial objectives, and to broaden their interests to try to reduce the environmental impact of their activity (Melay and Kraus 2012; Endrikat et al 2014; Li et al 2017). According to the socioemotional wealth (SEW) perspective, family firms (in which the owning family takes care of the ownership and control of the firm with a desire for generational continuity) have distinctive characteristics such as long-term vision and accumulation of intangible values, such as reputation or the generation of trust in stakeholder relationships (Neubaum et al 2012). These characteristics explain why environmental performance is of particular relevance for family businesses, where success is measured not solely in terms of economic performance (Gómez-Mejía et al 2007). We have found only two studies—Craig and Dibrell (2006) and Huang et al (2014) —which explain that these distinctive characteristics of family firms favour the possibility of environmental investments translating into improved financial results, showing that the effectiveness of environmental proactivity for the firm’s financial results is greater in family firms than in non-family firms
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