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According to new research from the University of Surrey, family ownership of companies has a positive effect on the environmental performance of companies, especially if the company bears the family name.
Researchers from Surrey Business School have examined the impact of family ownership on the likelihood of companies adopting the International Organization for Standardization’s ISO 14001 criteria – a recognized and respected framework used by organizations to measure their environmental impact.
Professor Tazeeb Rajwani, co-author of the study and head of the Department of Strategy and International Business at the University of Surrey, said: “The aim of any business is to generate shareholder value, and this is no different for family businesses. however, economic motive and family are inextricably linked. We have found that one of the company’s immediate goals is to pursue initiatives that improve their local community and environment.
“The desire to preserve socio-emotional wealth and the company’s own survival from generation to generation drives family businesses to pursue legitimacy by meeting institutional expectations, such as the ISO 14001 criteria.”
The study also found that the effect is stronger for companies whose name includes the family name and for companies located closer to major cities. Researchers found that the family name is an important symbolic feature that contributes to family members’ identification with society.
Professor Tazeeb Rajwani continued: “Investors seeking profit maximization should be aware of the influence of non-financial objectives on strategic decisions in family businesses. In addition, managers who are not related to family businesses should understand the existence of and the potential influence of recognize the motives of the family.
“Majority family members in the company can make strategic decisions that resonate with their social-emotional aspirations, but are not directly related to profitability. It is important for these managers to be aware of and meet the personal requirements of family members. understand that may affect the company’s operations and performance.”
Aside from investors and management positions within family businesses, these findings also have important implications for environmental stakeholders, including the companies’ own consumers and suppliers.
The study is published in Long term planning.
Family-owned companies take better care of their workforce, but not the environment
Abubakr Saeed et al, Is family important? Ownership, motives and environmental strategy of companies, Long term planning (2022). DOI: 10.1016/j.lrp.2022.102216
Quote: Is family important in business? Study Evaluates Family Ownership on Corporate Environmental Strategies (2022, July 20) retrieved July 20, 2022 from https://phys.org/news/2022-07-family-business-ownership-firms-environmental.html
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