Doing more and doing better are two different entities: Different patterns of family control and environmental performance

Abstract

Family firms bear two types of agency costs, including type I and type II agency problems, in corporate environmental practices: (1) Outside executives at family firms hesitate to engage in environmental strategies, which can lead to drops in profits; (2) Controlling families employ opportunistically environmental management to achieve their interests. We argue that a primary cause for the agency problems lies on ineffective internal corporate governance at family firms, which can cause loss of managerial (or power) balance between outside executives and family executives. Our findings show that family firms with ownership and strategic control (FSC), which family executives and outside executives monitor and constrain each other, can achieve the highest environmental performance. Moreover, external controls, including product market competition and provincial environmental regulations, substitute effective internal control of FSC. The environmental performance premium of FSC is more prevalent when the production market competition is lower. Family firms with ownership, operational, and strategic control (FOSC) can achieve higher environmental performance within a province with more stringent environmental regulations.

How does world economic policy uncertainty influence the carbon dioxide emission reporting and performance? Study of Global Fortune 500 firms

“…Therefore, concerning how ownership structure in uences carbon emission disclosure, previous literature illustrated that rms should communicate their environmental achievements to institutional owners and minority controlling shareholders to strengthen their investment con dence and improve shareholder interests (Solikhah et al 2021). Furthermore, Yu et al (2021) present a relatively positive effect of ownership structure on corporate environmental management. By examining the implications of institutional ownership on carbon dioxide emission reporting and performance under uncertainty, we contribute to the knowledge of earlier work in this area.…”

“…Current research (e.g., Mutascu 2018;Liu et al 2019;Jiang et al 2019) focuses on the factors that in uence carbon dioxide emissions, however past ndings exclude institutional macroeconomic elements that may be related to carbon dioxide emissions. One of these macroeconomic institutional elements that in uences enterprises' external business environments and, in turn, their decision-making is global uncertainty (Jiang et al 2019;Yu et al 2021). The production choices made by businesses also in uence carbon dioxide emissions (Song et al 2017; Wang et al 2020).…”

Corporate Social Responsibility in Family Firms: Status and Future Directions of a Research Field

“…This increases in family firms with larger business-owning families (moderation) Wiklund ( 2006 ) Family ownership – Agency theory Conceptual – – – Family firms show more positive CSR behavior, due to the bond between the family and the company Yu et al ( 2015 ) Family ownership; majority ownership; independent directors – SEW Quantitative 229 firms (5 year panel) – Taiwan Family firms have a better CSR performance than non-family firms. SEW, measured by the majority shareholding and the proportion of independent directors on the board, has a positive effect on CSR Yu et al ( 2021 ) Family ownership and management; provincial environmental regulations – Agency theory Quantitative (6-year panel) L South Korea This study shows that family firms with ownership, operational, and strategic control can achieve higher environmental performance within a province with more stringent environmental regulations Zamir and Saeed ( 2020 ) Closeness to financial markets; family ownership (moderator); family commitment – Legitimacy theory Institutional theory Quantitative 649 firms (6-year panel) – International (Intercontinental) Firms located closer to the financial centers have a higher CSR disclosure rates compared to their more distant counterparts. This effect is positively moderated by family ownership and being a listed company.…”

“…The research reveals that most studies use family ownership (e.g., Bammens & Hünermund, 2020 ; Kim et al, 2020 ; Rees & Rodionova, 2015 ; Terlaak et al, 2018 ) followed by family management (e.g., Block, 2010 ; Cui et al, 2018 ; Oh et al, 2019 ) or a combination of both (e.g., Craig & Dibrell, 2006 ; Dangelico, 2017 ; Kim & Lee, 2018 ) for examining the effect of family antecedents on CSR in family firms. Although there is a moderate tendency towards a positive effect, no apparent effect on CSR activities can be found; this could be because these measures alone are insufficient to influence firm decisions, as the owning family cannot adequately influence internal decision-making processes by their mere presence (Terlaak et al, 2018 ; Yu et al, 2021 ). As suspected, the operational measures do not sufficiently reflect the overlap between family and company (Chua et al, 1999 ).…”

A Systematic Literature Review on Ownership and Corporate Social Responsibility in Family Firms

“…Prior research suggests that high-quality and CSR-concerned institutional environments, such as a high degree of marketization [63], high levels of regional institutional development [87], stakeholderoriented countries [113], and regions with stringent environmental regulations, push firms with high family ownership to perform more CSR, such as performing more voluntary CSR [63], performing more internal and external CSR [87], and tackling more social and environmental issues [113]. The research findings of Yu et al [136] showed that family firms with ownership and strategic control gain more environmental performance premium in low-competition product markets, which satisfies the family's affective needs (e.g., reduction in risk and preservation of family wealth), and in provinces with more stringent environmental regulations, which motivate family firms to avoid regulation violations that threaten the legitimacy, reputation, and succession of their family firms.…”