Family Firms, Chaebol Affiliations, and Corporate Social Responsibility

Haeyoung Ryu,Soo-Joon Chae

doi:10.3390/su13063016

Haeyoung Ryu, Soo-Joon Chae

Open Access

https://doi.org/10.3390/su13063016

Copy DOI

Journal: Sustainability	Publication Date: Mar 10, 2021
Citations: 4	License type: CC BY 4.0

Affiliation: Hansei University, Kangwon National University

Abstract

This study analyzes the corporate social responsibility (CSR) activities of family-owned firms by investigating public companies in Korea. By nature of their governance structures, which are aligned with the interests of their shareholders and management, family firms are managed from a long-term perspective based on a sense of ownership. While CSR implementation entails investment costs, it ultimately increases firm value by enhancing the firm’s reputation and brand image. As such, family firms are expected to be more active than non-family firms regarding CSR investments. We conducted an empirical analysis based on the Korean Economic Justice Institute Index (KEJI Index) from the Citizens’ Coalition for Economic Justice and found that family firms’ CSR scores were higher than those of non-family firms. This indicates that family firms are relatively more active in their CSR activities, as they are managed from a long-term viewpoint. However, family firms classified as large-scale corporate groups (chaebols) had lower CSR activity levels. This is because when family firms are classified as corporate groups, they can enjoy monopolistic market positioning through their subsidiaries, and are thus more likely to utilize the resources originally required for CSR in other projects that conform to the pursuit of firm interests.

Highlights

While many scholars and institutions have defined corporate social responsibility (CSR), there is a lack of clear theoretical foundations regarding the role and definition of CSR
The results indicated that the values of the regression coefficient β1, which show the influence of family firms (FAM1 and FAM2) on CSR activity levels, were 0.585 and 0.544, respectively, and were found to be significantly positive at the 1% significance level
These results indicate that family firms, which are not professionally managed companies that are assessed based on performance, are not fixated on short-term results

Summary

Introduction

While many scholars and institutions have defined corporate social responsibility (CSR), there is a lack of clear theoretical foundations regarding the role and definition of CSR. Frooman [1] defines CSR as corporate activities that can influence the wealth of a firm’s stakeholders, whereas McWilliams and Siegel [2] explain CSR as a firm’s attempt to create social wealth beyond what is required of the firm legally and in terms of its interests. Many scholars explain CSR activities as a concept that relates to the responsibility of the firm to society and its stakeholders [4,5,6] and view it as a series of voluntary activities by the firm to better society and the environment [7]. While there is no single definition of CSR, it is typically accepted as a firm’s voluntary activity, which goes beyond its legal requirements, in the interests of its employees, consumers, society, and the environment. Freedman [8] argued that CSR activities should only be performed with the premise of increasing profits for a firm and that, if a firm focuses excessively on CSR, it damages firm value

Objectives

Methods

Results

Conclusion