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, CO2 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.
Highlights
Organizations should respond effectively to changes in their environment to ensure superior performance and longevity [1,2,3]
While prior studies based on socioemotional wealth (SEW) literature have utilized a dichotomous view of family-controlled firms and non-family firms to focus on the passive responses of firms to environmental interests and issues, this study explores how the extent of family involvement influences proactive behavior
This paper aimed to explore the relationship between family involvement and environmental innovation
Summary
Organizations should respond effectively to changes in their environment to ensure superior performance and longevity [1,2,3]. Firms have endeavored to adapt to environmental issues in response to the burgeoning social interest in them. While existing studies based on the isomorphic mechanisms of neo-institutional theory provide useful insights into the homogeneous responses of firms to social needs and interests [4,5], they do not adequately explicate why firms behave differently in such situations [6]. To solve this intriguing dilemma, recent studies have focused on family owners; these are powerful parties within firms and affect a firm’s decision making and behavior. Familycontrolled firms are likely to respond to environmental issues even if these reactions cannot
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