Based on case studies of religious Muslim and Christian family firms operating in a religiously diverse country, we explain the multiplicity of family, business, religion, and community logics in the family firm. In particular, we give attention to the religion logic and how it interacts with other logics when family firms are considering ethical issues. We show that religion has a rule-based approach in Muslim family firms and a principle-based approach in Christian family firms. We also draw attention to the (...) fluidity characteristic of the religion logic, through which family firms interpret the role of religion among other logics in influencing ethical decisions. Our study advances institutional logics literature in highlighting the plurality between and within logics in family firms, and contributes to the growing recognition of the influence of religious beliefs on the ethical behaviors of family firms. (shrink)

This study examines to what extent different types of CEOs in family firms influence external and internal stakeholder-related CSP as compared to CEOs in nonfamily firms. Linking family CEO and nonfamily CEO with CSR outcomes, we provide evidence that family CEOs are positively associated with both external and internal CSR, whereas nonfamily CEOs within family firms tend to be negatively associated with both external and internal CSR. We show that the incumbent CEO’s age moderates the above relationships, indicating the existence (...) of shifting family priorities and suggesting a tendency toward CSR conformity as the salience of succession concerns increases. (shrink)

There is a dearth of business ethics research on family firms, despite the importance of such firms to the US economy. We answer Vazquez’s call to examine the intersection of family-firm research and business ethics, by investigating whether external auditors assess higher risk of fraud in family firms. We test the contradictory predictions of two dominant theoretical perspectives in family-firm research—entrenchment theory and alignment theory. We conduct an experiment with highly experienced external audit professionals, who assess the risk of fraud (...) and make client acceptance decisions for family firms versus non-family firms with different strength of corporate governance: strong versus weak audit committees. We find that auditors assess the risk of fraud as higher for family firms than for non-family firms, consistent with the predictions of entrenchment theory. Auditors are also less likely to make client acceptance recommendations for family firms. The strength of the AC moderates the family-firm effect, whereby auditors assess family firms with weak ACs to have the highest fraud risk and to be the least desirable audit clients. Our findings suggest that auditors perceive more severe agency conflicts to be present in family firms than in non-family firms, consistent with entrenchment theory, according to which family members may behave opportunistically to extract rents and potentially expropriate the firm’s resources at the expense of minority shareholders. (shrink)

Standalone corporate social responsibility reports vary considerably in the content of information released due to their voluntary nature. In this study, we develop a disclosure score based on the tone, readability, length, and the numerical and horizon content of CSR report narratives, and examine the relationship between the CSR disclosure scores and analyst forecasts. We find that CSR reporters with high disclosure scores are associated with more accurate forecasts, whereas low score CSR reporters are not associated with more accurate forecasts (...) than firms who do not issue CSR reports. The findings are robust to controlling for firm characteristics including CSR activity ratings and financial narratives. The findings are driven by experienced CSR reporters rather than first-time CSR reporters. Together, our findings suggest that the content of CSR reports helps to improve analyst forecast accuracy, and this relationship is more pronounced for CSR reports with more substantial content. (shrink)

The paper builds on the stakeholder salience framework and applies a social identity approach to explain family firm dynamics and how these could impact on family firm governance and ethics. In particular, we consider the family as the main stakeholder for family firms and we refer to the recent approaches to stakeholder theory based on ‘names-and-faces’ and on social identity to focus on family members at the individual and organizational level. Family businesses offer an opportunity to study stakeholder salience in (...) settings with multiple logics. Our paper acknowledges how the attributes of legitimacy, power and status, for family business members, can derive from three different institutional settings (family, business and local community) and how these attributes are assigned and gained by family members on the basis of the stakes they put (or could put) on the business. From the analysis of these dynamics specific ethical considerations emerge. (shrink)

Family values are argued to enable ethical family business conduct. However, how these arise, evolve, and how family leaders articulate them is less understood. Using an ‘identity work’ approach, this paper finds that the values underpinning identity work: arise from multiple sources, evolve in tandem with the context; and, that their articulation is relational and aspirational, rather than merely historical. Prior research mostly understood family values as rooted in the past and relatively stable, but our rhetorical analysis unlocks a more (...) dynamic and promising research direction advancing family business ethics. (shrink)

This systematic literature review contributes to the increasing interest regarding corporate social responsibility (CSR) in family firms—a research field that has developed considerably in the last few years. It now provides the opportunity to take a holistic view on the relationship dynamics—i.e., drivers, activities, outcomes, and contextual influences—of family firms with CSR, thus enabling a more coherent organization of current research and a sounder understanding of the phenomenon. To conceptualize the research field, we analyzed 122 peer-reviewed articles published in highly (...) ranked journals identifying the main issues examined. The results clearly show a lack of research regarding CSR outcomes in family firms. Although considered increasingly crucial in family firm research, a study investigating family outcomes (e.g., family community status, family emotional well-being), as opposed to firm outcomes, is missing. This literature review outlines the current state of research and contributes to the actual debate on CSR in family firms by discussing how family firms can use CSR activities as strategic management tools. Moreover, our analysis shows a black box indicating how CSR links different antecedents and outcomes. The black box is significant since firms generally need to know where to allocate their scarce resources to generate the best outcomes. We identify nine research questions based on these findings, which we hope will inspire future research. (shrink)

Business Ethics: A European Review, EarlyView.

This paper investigates the layoff behavior, a typical people dimension of corporate social performance, of family firms from a place-based perspective. We theorize that a place-based culture within family firms ensures that all organizational members share a deep sense of connection with the place of operations which makes them inherently care about their impact on society. Using data on layoffs of 2000 largest US firms between 1994 and 2007, we find that family firms do indeed exhibit a lower tendency to (...) lay off employees in comparison to non-family firms; this relationship is particularly strong in ‘places’ with low population where the negative social externalities related to layoffs tend to be higher. Further post hoc analyses indicate that family firms have a strong place-based culture which can provide resource-based competitive advantages. (shrink)

Building on agency and resource-based view theories, this study investigates the level of environmental disclosure (ED) practices of family versus non-family firms and explores the moderating role of board gender diversity. We test our hypotheses on a 3-year (2018–2020) panel data sample comprising 324 observations of Italian small- and medium-sized enterprises traded on the Euronext Growth Milan. Findings show that, compared to non-family firms, companies with a family firm status are characterized by lower levels of ED. Gender diversity on the (...) board, however, moderates this relationship, reducing this gap, to the extent that the family firm status is associated with higher ED when the number of women directors is high enough to constitute a critical mass. We consequently contribute to the studies on family business, corporate governance, and corporate social responsibility. (shrink)

Although establishing gender equality in board and managerial positions has recently become more important for organizations, companies with low levels of gender diversity seem to perceive an ethical dilemma regarding the ways, in which they attempt to attain it. One way that organizations try to move toward gender equality is through the use of their corporate websites to manage potential applicants’ impressions of their current levels of, and actions to improve, gender diversity. The dilemma is whether to truthfully communicate their (...) low level of gender diversity, conceal it, or exaggerate it. On the one hand, organizations that are truthful may find it difficult to achieve equality because women are less attracted to companies that lack diversity. On the other hand, organizations that are untruthful risk their moral legitimacy. The present work investigates gender diversity-related communication on the corporate websites of 99 major German companies. Based on theoretical work on minority attraction, we apply an organizational impression management taxonomy to guide our in-depth content analysis. With this approach, we hope to advance the understanding of how the issue of gender diversity is presented on corporate websites, which is useful for both organizational decision makers as well as diversity researchers. We found that although gender diversity-related communications on corporate websites contain both assertive and defensive organizational impression management tactics, as well as a third type of tactic we refer to as “acknowledgement,” assertive tactics were used more frequently. We argue the existence of a paradox whereby organizations use assertive impression management tactics to maintain pragmatic legitimacy but compromise their moral legitimacy by doing so. Furthermore, we argue that moral legitimacy can be maintained or restored through the sincere use of defensive impression management tactics and acknowledgement. (shrink)

This study answers Vazquez’s :691–709, 2016) call for more research focused on the intersection between family firms and business ethics. We investigate two contextual factors potentially affecting the ethical reporting of chief financial officers : a firm’s social ties to the controlling family and the CFOs’ perceived relationship quality with the CEO. We test our hypotheses by examining the financial reporting behavior of Chinese CFOs who work at family or nonfamily businesses and in private or public firms. Results of this (...) study advance our understanding of social and contextual factors that may compromise CFOs' reporting behavior in family firms. This research also suggests that failure to distinguish between public and private companies may bias the results of studies that examine family firms. (shrink)

This work focuses on corporate social responsibility disclosure practices of multinational corporations. Based on a longitudinal study of CSR reports of companies operating in the automotive industry, the paper offers a detailed study of how disclosure practices are changing and which principles and approaches influence and drive the development of such disclosure. Based on a four-year report-based study, the findings enable us to identify three main trends in the CSR disclosure strategy of automotive firms. First, in line with the mainstream (...) CSR literature, the present study confirms the trend towards the increasing environmental and social accountability. Second, it adds evidence to the emerging debate regarding the harmonization and standardization of reporting and discusses this aspect by mentioning the standards as exerting some normative pressures within the sector. Finally, it provides evidence on specific links emerging between issues and actors. The implications of this evidence contribute to opening up the debate on CSR disclosure to the possibility of combining the institutional lens with a strategic approach that captures the materiality considerations of CSR disclosure. (shrink)

This paper examines the success of corporate communication in voluntary sustainability reporting. Existing studies have focused on the perspective of the communicators but lack an understanding of the perspective of information recipients to clearly evaluate this interactive communication process. This paper looks at the issue of a credibility gap perceived by external stakeholders when they doubt the authenticity of communicated information due to the reporting company’s governance structure. The paper uses family businesses to exemplify the emergence of such a gap (...) when outsiders become concerned about the potential agency problem of the integrated ownership and management controlled by a few members of the same family. Following source credibility theory, these concerns raise a credibility gap associated with a family firm’s trustworthiness and goodwill, even if the family has the expertise to carry out sustainability reporting. The findings of two experimental studies indicate that family businesses suffer a greater credibility gap than non-family businesses. An external and independent assurance service can mitigate such gaps, especially when the service is comprehensive and targets family businesses. The paper provides a complete view evaluating corporate communication by looking at the interaction between the communicating company and the information recipients. (shrink)

This article discusses the ethics and drivers of philanthropic foundations in emerging markets. A foundation organizes assets to invest in philanthropic initiatives. Previous scholarship has largely focused on developed countries, especially the United States, and has questioned the ethics behind the activities of foundations, particularly for strategic motives that served wider corporate purposes. We argue that philanthropic foundations in emerging markets have distinctive characteristics that merit separate examination. We scrutinize the ethics behind the longitudinal activity of such foundations using 70 (...) oral history interviews with business leaders in 18 countries in Africa, Asia, Latin America, and the Middle East. We find that 55 out of 70 foundations associated with these leaders have been used as vehicles for a specific type of philanthropic ethics defined as “spiritual philanthropy”. These foundations often embodied personal or family traditions, culture, and religious values, which emphasized charitable giving and social responsibility. As in the case of many of the industrial foundations in Europe, these foundations also carried founding family names and provided a structure to maintain family control and enhance corporate reputation. We argue that, as business leaders in emerging markets are more directly exposed to dire social, educational and health deprivation than their counterparts in developed countries, they are less inclined toward grandiose world-making, and their foundations are more focused on delivering immediate benefits to communities in their home countries, motivated by implicit or explicit spirituality. (shrink)

Business Ethics: A European Review, EarlyView.

Previous studies have been split over how to view family owners’ CSR engagement, arguing that they either engage in or disengage from CSR based on different motives (i.e., preserving socio-emotional wealth vs. seeking rent expropriation). Focusing on family owners in business groups, this study integrates these divergent views. We hypothesize that family owners would pursue both motives simultaneously by optimizing the level of CSR of each affiliated firm depending on their ownership level. Furthermore, we argue that this tendency is moderated (...) by group-level contexts. Using a sample of Korean business groups, we found that family ownership is negatively associated with affiliated firms’ CSR. Also, this negative relationship is more pronounced when firms belong to business groups with more charitable corporate foundations and when business networks are greater in their scope and scale. This study contributes to the literature by offering a more complete understanding of how family owners make CSR decisions in business group contexts. (shrink)

Drawing on virtue ethics and stakeholder theory, the article investigates the unfolding of business ethics in the wine industry, with a focus on family businesses. Attention is specifically paid to the interplay of internal (i.e., employees-centeredness and organizational inclusiveness) and external (i.e., people-centeredness and territorial development) ethical orientations. A unique sample of 164 Italian wine businesses was built to get evidence of how the nexus of internal and external ethical orientations is handled, emphasizing the distinctive traits of family businesses. We (...) found that employee-centeredness nurtured organizational inclusiveness and fostered people-centeredness. Interestingly, the family businesses’ concern for territorial development curbed the positive implications of employee-centeredness on people-centeredness. The study results extend scholarly knowledge, shedding light on a ‘grey’ side of family businesses’ ethics. (shrink)

Are green patents granted to family firms perceived more favorably by the market than those granted to non-family firms? Using a sample of 8918 green patents granted to family and non-family firms between 2014 and 2018, our study shows that it depends on the attributes of the green patent. Integrating the green innovation and family firm literatures with signaling theory, we develop a theoretical framework that highlights the need for family firms to balance their pursuit of green innovation with signals (...) of innovation stability and due diligence so as to gain the greatest market value from their green patents. In contrast, we theorize that green patents offer nonfamily firms the greatest gain in market value when they signal innovation radicalness and newness. While our results show that the stock market reaction does not vary significantly between family and non-family firms, when we consider the attributes of green patents, we find that compared to nonfamily firms, family firms with longer green patent grant lags realize a more positive market reaction whereas those with higher patent radicalness experience a more negative market reaction. As such, our study suggests that the types of green patents that garner the greatest market value differ for family and nonfamily firms. The findings are robust to alternate family firm definitions, and additional robustness checks. (shrink)

Given the widespread use of social media, growing interest has been paid to the nexus of corporate ethics and the celebrity status of chief executive officers (CEOs). This is of even more paramount importance in family-owned firms that are very sensitive to public image and its ethical relevance. However, no empirical evidence has been found. In response, the purpose of this paper is to examine the mechanisms through which family business ethics and CEO celebrity are associated, as well as the (...) moderating influence of a leader's personal traits on these relationships. According to secondary data from listed Chinese family firms, from 2013 to 2020, the celebrity status of CEOs was strongly connected with the ethical behavior of organizations; however, this link was mitigated by the heterogeneity of CEOs. The firm's ethical behavior and the CEO's celebrity are positively correlated when the CEO is a family member; when the CEO is not a family member, the correlation is inversely U-shaped. Furthermore, the age, dualities (including the chairman role), and tenure of CEOs had a major impact on the mechanisms of CEO fame and family business ethics. The theoretical and practical implications of the study are discussed in detail. (shrink)

This paper presents a study on how corporate social responsibility (CSR) strategies create value amongst family and non-family firms. Additionally, in our study, we considered the moderating effect of independent directors on the relationship between CSR and firm value. Based on data drawn from companies operating in 61 countries over an 11-year period (i.e. from 2010 to 2020), our findings demonstrate that non-family firms derive market benefits from the governance improvements made by independent directors concerning CSR strategies. In contrast, the (...) CSR strategies promoted within family firms are associated with lower firm value. However, this negative association is neutralised by the role played by independent directors, especially when the company is controlled by succeeding generations and not just by the founding one. These directors play a dissuasive role that leads family members to reassess their external socio-emotional preferences (reputation, image, etc.) in order to uphold the internal priorities of day-to-day decision-making. Our study has important implications for research and practice. (shrink)

The goal of this study is to reveal which contextual factors can shape ethical behaviour and decision-making in family firms (FFs), with the aim to uncover emerging themes that help set the stage for future work on FF ethics. To do so, we conducted an integrative literature review. By systematically collecting, reviewing 90 studies and synthesizing their key findings with prior theoretical foundations in the FF field, we demonstrate how personal and family values, preservation of socioemotional wealth, generation succession and (...) structural factors (e.g. FF size, FF life cycle) can affect ethical decision-making in FFs. We also provide propositions and research pathways to orient future studies. (shrink)

Corporate social responsibility (CSR) is often criticized for being undertheorized, contested, and largely redundant in the field of business and society. Yet limited attention has been paid to diverse ways of theorizing CSR. Driven by the identified weaknesses in the theoretical development of CSR, this research aims to explore the potential of theory elaboration implemented via grounded theory (GT) in strengthening CSR theorization. In doing so, the study offers a unique contribution by being the first study to offer actionable steps (...) and guidelines for implementing theory elaboration via GT in CSR research. The study also offers a typology that can serve as a decision-making tool for researchers seeking to implement theory elaboration through GT in their CSR studies. Lastly, as a result of conducting two sets of literature reviews, the study outlines a number of CSR topics that can benefit from the proposed research pathway, and the particular theoretical CSR benefits theory elaboration via GT can offer. Hence, the study aspires to serve as a “stepping stone” for offering enhanced CSR theory. (shrink)

Despite the important progress being made in the study of family business ethicality, there remains a lack of consensus in the findings and some ambiguity concerning the concept. We propose a new perspective on family firm ethicality by building on a modified socioemotional wealth perspective. We theorize why family firms are likely to manifest exceptionally ethical or equally unethical behavior during crises, arguing this to be caused by the close socioemotional connection between family owners and their firms, the decision-making discretion (...) of these owners, and the secrecy with which they can act. We extend our framework to multiple stakeholders – employees, customers, and local, national, and global communities. Positive and negative examples are provided of firms confronting specific economic, human, and natural crises – demanding situations that reveal authentic ethicality when the pressure is on. We also introduce the notions of ethical heterogeneity, focus and coverage, and their moderators, arguing that the same family and firm may exhibit both ethical and unethical behavior depending on the crisis and stakeholders concerned. Propositions are provided throughout, and research implications are drawn. (shrink)

While the prevailing perspective on executive leadership has emphasized the effectiveness of a unified command structure, family firms frequently adopt shared leadership structures, such as dyads, triads, or larger co-CEO constellations. Given the widespread use of such structures in family firms, it becomes imperative to understand how family involvement in the firm shapes the dynamics of co-CEO constellations and their implications for firm outcomes. Drawing upon the socioemotional wealth (SEW) perspective, we propose that the salience of extended SEW concerns increases (...) the costs associated with a shared leadership structure. These elevated costs, in turn, result in adverse environmental, social, and governance (ESG) outcomes. Our empirical analysis, based on panel data from 76 Italian firms listed on the Milan Stock Exchange during 2003–2020, suggests that family firms employing a co-CEO structure tend to exhibit lower ESG performance, while a positive relationship emerges in nonfamily firms. We theorize and find empirical support that the negative effect for family firms stems from family-induced cognitive diversity, manifested via the inclusion of both family and nonfamily members or family members from different generations in the co-CEO constellation. Importantly, we identify a key mitigating factor: when one of the co-CEOs also holds the position of the board chair, the negative impact of the co-CEO structure on ESG performance is mitigated and even turns positive. These findings advance our understanding of how family involvement in the shared leadership structure shapes a firm’s ethical orientation, having important implications for the governance of family firms. (shrink)

We test competing theoretical perspectives of family firm governance in two separate studies by investigating whether family firm control moderates the detrimental effect of a management training ground on internal auditor objectivity and on the external auditor’s decision to rely on the internal audit function. In Study 1, we assess the objectivity of internal auditors working under an IAF that serves as a MTG or non-MTG and located in a family or non-family firm. A key result of Study 1 is (...) the mitigating role of family firm control, as we find that the objectivity of internal auditors is reduced when the IAF serves as a MTG but only in non-family firms. When the IAF is located in a family-controlled firm, the objectivity of internal auditors is unaffected by the opportunity to be promoted into management positions outside of the IAF. In Study 2, we utilize a controlled laboratory experiment with experienced Big 4 auditors as participants and examine their decision to rely on an IAF when it serves as a MTG. Our analyses indicate that external auditors reduce their reliance on non-family firm IAFs that are also MTGs and their decision is fully mediated by the perceived objectivity of non-family firm internal auditors. In contrast, external auditors’ reliance on family firm IAFs and their perceptions of internal auditor objectivity are unaffected under a MTG regime. The results of Studies 1 and 2 provide support for the alignment perspective of family firms. (shrink)

Recent conceptualization of built‐in versus bolted‐on corporate social responsibility (CSR) initiatives has offered a much‐needed distinguishing framework to sophisticate our understanding of why different CSR initiatives yield varying corporate social performance (CSP) and associated recognition from stakeholders. One of the major roadblocks in conducting research on these two types of CSR initiatives is the absence of a valid and reliable measure. We address this void by developing a measure for bolted‐on versus built‐in CSR that relies on coding publicly available content. (...) Our measure of these two types of CSR initiatives tests favorably for both convergent and discriminant validity and inter‐rater reliability. Advancement of such a measurement instrument will positively contribute to CSR research, enabling scholars to better theorize the linkage between CSR and reputation, and other aspects of firm performance. (shrink)