The Role of Governance in Achieving Sustainability in Family-Owned Business: Do Responsible Innovation and Entrepreneurial Culture Matter?

Abstract

Research on family business sustainability has seen a surge over the last decade. Despite this, very little research has been performed to investigate the impact of governance on family business sustainability. Building on this gap, this paper empirically examines the impacts from organizational governance and responsible innovation on the sustainability of family-owned businesses. It also evaluates entrepreneurial culture’s contribution as a moderator of the nexus of organizational governance, responsible innovation, and business sustainability in Saudi Arabia. A sample of 396 responses were collected from 87 family enterprises; respondents were generally principal managers and/or main business owners. The relationships in the conceptual model were tested with structural equation modelling using SmartPLS. The results show that organizational governance and responsible innovation positively and statistically significantly impact business sustainability among family-owned businesses in Saudi Arabia. Furthermore, entrepreneurial culture significantly and positively moderates the organizational governance, responsible innovation and business sustainability of family-owned businesses in Saudi Arabia. The results guide regulators in regulation formulation related to the achievement of business sustainability through good governance and effective entrepreneurial culture. Government and regulatory authorities must therefore encourage family-owned businesses in their predominantly economic functions in society, while also engaging in sustainability-oriented policy making and programs.