The cross‐cutting pursuit of family values: When and how do family firms engage in corporate environmental responsibility

Abstract

AbstractThis study examines how family values in a firm can impact non‐market strategies. Given that family members on the board tend to pursue non‐economic, especially family related, values, we attempt to specify how the perspectives, values, and tastes of family members serving on the board can be infused into the firm's environmental performance. Since actions addressing environmental issues are less directly related to family values than other types of CSR actions, such as donations and services to the local community, the family‐value‐infused characteristics of boards that represent family firms' pursuit of socio‐emotional wealth, can make firms less committed to environmental issues. Using our comprehensive sample of large U.S. firms consisting of 15,086 firm‐year observations between 1998 and 2016, we find that when family values are treated as a critical factor for non‐market strategies, family dominated firms are less likely to pursue corporate environmental responsibility. We also find that both external and internal factors can positively moderate the family firm's environmental underperformance by diluting the family values.