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Family Firms’ Corporate Social Performance: A Calculated Quest for Socioemotional Wealth

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Abstract

This study investigates the engagement of family firms in corporate social responsibility. We first compare their corporate social performance (CSP) to non-family firms. Then, following recent evidence on the heterogeneity of family firms, we examine two factors that may influence CSP within family firms: the level of family control and the governance orientation of the country in which they operate. This research is based on a theoretical framework which considers both agency and socioemotional wealth (SEW) influences on family firms CSR engagements. Overall, we find that family firms exhibit lower CSP than non-family firms. But when focusing on family firms, our analyses show a curvilinear relationship between family control and CSP. At lower levels of control, family owners invest more in social initiatives to protect their SEW. Beyond a threshold level of control that we estimate at 36 % in our sample, economic considerations prevail over SEW and social performance starts decreasing. We also find that family firms operating in stakeholder-oriented countries are more attentive to social concerns than those operating in more shareholder-oriented countries.

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Notes

  1. Barnea and Rubin (2010) argue that corporate social performance should be positively related to the expenditure level on CSR initiatives. Furthermore, they contend that the association between socially responsible expenditures and firm value is non-monotonic (page 72). At lower levels of spending, CSR should positively affect firm financial performance and valuation. But, beyond a certain level, managers may be seen as over-investing in CSR.

  2. We are grateful to an anonymous reviewer who pointed at this possibility and suggested this approach.

  3. All statistical analyses were conducted with the Stata software.

  4. For robustness check, we also ran weighted least squares (WLS) and generalized linear model (GLM) regressions and obtained similar results.

  5. As a robustness check, we also run the regression on the non-family subsample and found the results to be similar.

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Acknowledgments

All authors contributed equally to this study. We gratefully acknowledge financial support from the Stephen A. Jarislowsky Chair in Governance, the Institute of Governance in Public and Private Organizations, the Walter J. Somers Chair, and the CPA Canada Accounting and Governance Research Centre at the University of Ottawa. The usual caveat applies.

Author information

Authors and Affiliations

  1. HEC Montréal, 3000 Côte-Sainte-Catherine, Montréal, QC, H3T 2A7, Canada

    Réal Labelle, Taïeb Hafsi & Claude Francoeur

  2. Walter-J.-Somers Chair in International Strategic Management, Montréal, Canada

    Taïeb Hafsi

  3. Stephen A. Jarislowsky Chair in Governance, Montréal, Canada

    Claude Francoeur

  4. Telfer School of Management, University of Ottawa, 55 Laurier East, Ottawa, ON, K1N 6N5, Canada

    Walid Ben Amar

Authors
  1. Réal Labelle
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  2. Taïeb Hafsi
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  3. Claude Francoeur
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  4. Walid Ben Amar
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Corresponding author

Correspondence to Claude Francoeur.

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Réal Labelle is Honorary Professor at HEC Montréal.

Appendix: SiriPro CSR dimensions

Appendix: SiriPro CSR dimensions

A. Business ethics

A.1. Public reports and communications

Public reporting on business ethics issues

Public reporting externally verified

A.2. Principles and policies

Formal policy statement on bribery and corruption

Formal policy statement on money laundering

A.3. Management systems

Whistle blower programs

B. Community

B.1. Public reports and communications

Public reporting on community issues

Public reporting externally verified

B.2. Principles and policies

Formal policy statement on operation in sensitive countries

Formal policy statement on origin of coltan

Formal policy statement on human rights and security forces

Public position statement on access to economic opportunity

Public position statement on access to basic needs

B.3. Management systems

Guidelines for philanthropic activities

Independent assessment of community projects in developing count

Formal programs for engagement or consultation with communities

Targets and programs for community reinvestments

B.4. Performance

Percent donations

Primary areas of support

Actual disclosure of payments (EITI)

Micro-finance activities

C. Corporate governance

C.1. Public reports and communications

Directors’ biographies

Directors’ and/or CEO’s remuneration/compensation

C.2. Principles and policies

Formal policy statement on remuneration

C.3. Management systems

Separate position for chairman of board and CEO

Number of independent NEDs in the board (and %)

Audit committee composition

Remuneration/compensation committee composition

Variable remuneration linked to sustainability performance

C.4. Performance

The company adheres to the one share, one vote principle

% Non-audit fees of audit fees

D. Customers

D.1. Public reports and communications

Public reporting on customers issues

Public reporting externally verified

D.2. Principles and policies

Formal policy statement on quality or customer satisfaction

Editorial policy

Formal policy statement on advertising ethics

Adherence to WHO ethical criteria for medicinal drug promotion

Position statement on the use of GMOs

Public position statement on debate over health consequences of food

Public position statement on responsible marketing

D.3. Management systems

Percentage of ISO 9000-certified sites

GMO labeling practice

Drug safety monitoring for any product

D.4. Performance

Data on product recalls (for health/safety reasons)

E. Employees

E.1. Public reports and communications

Public reporting on employees issues

Public reporting externally verified

E.2. Principles and policies

Formal policy on freedom of association and right to collective bargaining

Formal policy on elimination of discrimination

Formal policy statement on HIV/AIDS

Formal policy statement on minimum living wages

Formal policy statement on maximum working hours

E.3. Management systems

Targets and programs to increase diversity in the workforce

Targets and programs on health and safety

Percentage of health and safety certification

E.4. Performance

Data on layoffs and job cuts

Percentage of employees with fixed-term contracts

Data on lost-time illness rate

Data on lost-time incident rate

Data on total number of fatalities

F. Environment

F.1. Public reports and communications

Public reporting on environmental issues

Public reporting externally verified

F.2. Principles and policies

Environmental policy

Formal policy statement on green procurement

Formal policy statement on use of certified forestry product

Public position statement on transport and climate change

Public position statement on energy mix

F.3. Management systems

Percentage of ISO 14001-certified sites

Targets and programs for environmental improvement of suppliers

Targets and programs for CO2 eq emission reduction and/or energy consumption

Targets and programs to increase the use of renewable energy

Targets and programs to reduce air emissions

Targets and programs to reduce hazardous waste generation

Targets and programs to reduce non-hazardous waste generation

Targets and programs to reduce discharge to water

Targets and programs to reduce water consumption

Targets and programs to reduce material consumption

Targets and programs to phase out use of hazardous substances

Targets and programs to phase out CFC’s/HCFC’s in refrigeration equipment

Targets and programs to replace chlorine bleaching

Targets and programs to increase percentage of certified pulp/wood operations

Targets and programs to increase use of environmentally friendly paper

Targets and programs to improve the environmental performance of fleet and transport

Targets and programs to reduce emissions of transport means

Targets and programs to reduce the noise characteristics of transport

Targets and programs to phase out production of hazardous substances

Targets and programs to reduce the energy consumption of products

Targets and programs to reduce the impact of product at the end of the production cycle

Targets and programs to reduce the environmental toxicity of product

Targets and programs to reduce packaging materials

Targets and programs to increase the sale of eco-labeled/organic products

Targets and programs to reduce CO2 eq emissions of the fleet

Programs that offer favorable financial conditions for environmentally friendly projects

Programs to take into account environmental impact of products in investment decision

F.4. Performance

Percentage of ISO 14001-certified suppliers

Data on CO2 eq emissions

Data on renewable energy consumption

Data on air emissions

Data on hazardous waste generation

Data on non-hazardous waste

Data on discharge to water

Data on oil spills

Data on water consumption

Data on material consumption

Data on percentage of certified pulp or wood of total consumption/production

Data on percentage of recycled fiber as raw material

Percentage of FSC paper

Percentage of recycled paper used

Percentage of renewable energy sold

Data on assets managed according to SRI criteria

Data on total amount of environmental fines and penalties

Total land disturbed and not yet rehabilitated

Percentage of sales from eco-labeled/organic products

Environmentally friendly construction materials

Environmentally friendly building products

Products beneficial to the environment

Percentage of loans with detailed environmental examination

Percentage of environmentally oriented loans

Percentage of transactions with detailed environmental examination

Percentage of transactions with high environmental benefits

Percentage of investments in non-listed pioneer companies with high environmental benefits

Percentage of premium volumes or number of policies with environmental incentives

G. Contractors

G.1. Public reports and communications

Public reporting on contractors issues

Public reporting externally verified

G.2. Principles and policies

Formal policy statement on contractors and social issues

Formal policy on core labor issues

G.3. Management systems

Monitoring systems to ensure compliance

Translation and dissemination of the policy statements

Labor issues form a clause in standard procurement contracts

Targets and programs to increase the sale of fair-trade products

G.4. Performance

Data on number of non-compliance detected relative to number of suppliers

Percentage of SA8000-certified suppliers

Percentage of fair-trade products

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Labelle, R., Hafsi, T., Francoeur, C. et al. Family Firms’ Corporate Social Performance: A Calculated Quest for Socioemotional Wealth. J Bus Ethics 148, 511–525 (2018). https://doi.org/10.1007/s10551-015-2982-9

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