Abstract
AbstractDo family firms care more for different stakeholders than nonfamily firms when operating in a hostile business environment? This study addresses this question and fills the existing void in family business research. It shows that family‐controlled firms adopt corporate social responsibility strategies and balance the demands of internal and external interest groups to preserve their socio‐emotional wealth while facing fierce competition, resource scarcity, and penurious economic conditions. More specifically, our analysis of an international sample of 956 listed firms from 2006 to 2014 reveals that family firms show a higher level of corporate social responsibility (CSR) performance and better stakeholder orientation than nonfamily firms. Our findings are useful for managers, policymakers, and responsible investors.
Highlights
The aim of this study is to show how family firms behave and manage a wide range of stakeholders in a specific business context
We argue that to preserve their socio-emotional wealth (SEW) under hostile conditions, family firms behave more ethically to satisfy both groups of stakeholders
This study is set out to understand how family firms behave in a specific business environment
Summary
The aim of this study is to show how family firms behave and manage a wide range of stakeholders in a specific business context. Berrone, Cruz, and Gomez-Mejia (2012) call for future research to answer how family firms behave and respond to various stakeholders' demands under different environmental contexts We fill these voids in the literature by studying the CSR engagement and stakeholder orientation of family firms versus nonfamily firms in hostile conditions. Family owners and managers avoid any action that could lead to a loss of legitimacy and tag them as irresponsible (Deephouse & Jaskiewicz, 2013) within and outside the organization They integrate diverse nonpecuniary stakeholders' demands in their internal policies and practices to foster a trustbased relationship with their stakeholders (Cennamo, Berrone, & Gomez-Mejia, 2009), which boosts their positive reputation in the community and enhances other intangible assets (Aragón-Correa & Sharma, 2003). Family firms show a higher CSR performance towards internal and external stakeholders than nonfamily firms
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