Is nepotism so bad for family firms? A socioemotional wealth approach

This paper focuses on the issue of nepotism or the practice of hiring and managing family members in family firms. Extant research suggests that while nepotism is related to numerous problems, it also offers some unique advantages to family owned firms. We use a socioemotional wealth (SEW) perspective to develop a theoretical framework that explains how nepotism influences firm performance. In doing so, we rely upon a nuanced conceptualization of SEW to clarify why some family firms are more likely to engage in nepotism than others, as well as explain the contingencies under which nepotism may prove beneficial or detrimental for family firms. Finally, we explore how human resource practices might impact the interplay between nepotism, environmental contingencies, and firm performance.     

Entrepreneurial orientation,environmental sustainability and new venture performance: Does stakeholder integration matter?

Previous research has theorised that the link between entrepreneurial orientation (EO) and performance is mediated by environmental sustainability orientation (ESO). However, firm‐level factors that may moderate this relationship are lacking. This paper attempts to fill this gap by examining how and when EO enhances new venture performance by considering ESO as mediator and stakeholder integration as an important contingent factor. Using primary data obtained from 242 chief executive officers/entrepreneurs, it was found that the indirect relationship between EO and new venture performance is strengthened at high levels of stakeholder integration. Theoretical and practical implications are discussed.     

Do board sustainability committees contribute to corporate environmental and social performance? The mediating role of corporate social responsibility strategy

The purpose of this study is to investigate the impact of board sustainability committees on environmental and social performance and to examine the mediating effect of corporate social responsibility (CSR) strategy on the relationship between the presence of board sustainability committees and corporate sustainability performance. Using data of U.K. listed firms for the period of 2009–2016, the study employs panel regression analysis and bootstrapping techniques to test study hypotheses. The results suggest that the presence of a sustainability committee improves the effectiveness of CSR strategies. The results also indicate that firms with effective CSR strategies exhibit better environmental and social performance. Further, the empirical results show that the effectiveness of CSR strategy explains the positive relationship between board sustainability committees and corporate environmental and social performance, thus supporting the theoretical framework of the study. The findings of the study shed new light on this research direction and could be of interest to board members, managers, practitioners, investors, policy makers, and regulators that plan to promote sustainability practices and strategies needed for sustainable development.     

Customer‐oriented employees: Blessing or curse for firms?

I investigate whether the presence of customer‐oriented employees benefits firms in a competitive environment. Employees are defined as customer‐oriented if they are interested not only in their wage but also in the well‐being of their customers. I find that firms may obtain higher profits by hiring self‐interested rather than customer‐oriented employees. This is because the employees' customer orientation has opposing effects on the profits obtained by the firms. On the one hand, customer‐oriented employees provide a given level of quality for a lower wage. On the other hand, the employees' customer orientation increases competition reducing prices. If the second effect dominates, firms find themselves trapped in a prisoners' dilemma as the strategy of hiring self‐interested employees is strictly dominated by that of hiring customer‐oriented employees. Hence, the very presence of customer‐oriented employees may hurt firms. If motivated employees are merely interested in the quality of the good provided, the effect on the price outlined before disappears.     

Acquisitions of family owned firms: boon or bust?

Using a hand-collected dataset, we examine the acquisitions of 307 family owned targets for the period 1984–2000 to study the conflicting roles of entrenchment and alignment of interests in these firms. We find that bidders experience the strongest announcement market reaction at the medium levels of family ownership. However, bidder returns are negatively impacted when acquiring a public target family firm, even controlling for the percent owned by the family. We also find that overall firms that acquire family owned targets experience significant large negative returns in the long run. However, the long run results are also sensitive to the ownership structure of the family firm target with medium levels resulting in insignificant returns in the long run.     

How do corporate environmental policy and corporate reputation affect risk‐adjusted financial performance?

The current study aims to answer dual, related questions: Does corporate environmental policy affect corporate reputation, and does this link also influence risk‐adjusted profitability and company's risk? With a comprehensive framework involving analyses of each question, among a sample of firms traced by the Reputation Institute, this study reveals several notable results, after correcting for endogeneity biases. First, environmental engagement and green product innovation are both antecedents of corporate reputation. Second, corporate reputation has a positive impact on risk‐adjusted profitability and Z score indicator of financial distress risk. Thus, corporate environmental responsibility and green practices represent cospecialized assets that enhances an intangible asset, namely, corporate reputation. The latter influence constitutes a missing link between sustainable development and the firm's financial performance. Overall, environmental engagement and corporate reputation act as insurance‐like protections of firm competitiveness.     

Is corporate environmental disclosure associated with firm value? A multicountry study of Gulf Cooperation Council firms

Several studies have found a relationship between corporate social and environmental disclosure and firm value (FV) or accounting profitability. Where environmental disclosure has been the focus, though, only single-country studies have been published, and most of the previous research concerns the developed world. This study examines the association between corporate environmental disclosure (CED) and FV in the Gulf Cooperation Council (GCC) countries, where CED has been increasing from its previous low base. Findings from a multicountry sample of 500 firm-year observations using a 55-item unweighted environmental disclosure index suggest that CED is significantly and positively related to FV as measured by Tobin's Q (TBQ). The relationship is robust to using a weighted version of the disclosure index, individual countries and environmental disclosure subindices. Some evidence of a positive relationship between CED and return on assets is also found, but even where statistically significant, the relationship is much weaker than in the case of TBQ. For empirical and theoretical reasons, we recommend that future studies pay greater attention to market-based proxies, if possible, when investigating the value relevance of CED in both developed and developing countries. Our results suggest that both managers and policymakers in GCC countries should take a positive view of expanded CED.     

Corporate environmental reporting: Are French firms compliant with the Task Force on Climate Financial Disclosures' recommendations?

This article deals with the practices of French corporate environmental disclosure with a focus on climate-related risks. In particular, it aims to analyse the compliance of CAC 40 firms with the recommendations of the Task Force on Climate-related Financial Disclosures (2017), an international initiative made up by Financial Stability Board to enhance financial transparency. On the basis of a content analysis of firms' reference documents spanning 2015–2018, we constructed the Climate Compliance Index (CCI) to evaluate whether firms disclose information on climate risks and opportunities about governance, strategy, risk management and metrics. Our results highlight a gradual increase of the CCI despite disparities across sectors and management areas. The content analysis allows us to develop a set of indicators frequently reported by domain and to identify and define climate risks and opportunities and their financial impacts per sector, which is a first step to improve the disclosure of non-financial information.     

Do environmental,social, and governance activities improve corporate financial performance?

This study investigated the relationship between corporate efficiency and corporate sustainability to determine whether firms concerned about environmental, social, and governance (ESG) issues can also be efficient and profitable. We applied data envelopment analysis to estimate corporate efficiency and investigated the nonlinear relationship between corporate efficiency and ESG disclosure. Evidence shows that corporate transparency regarding ESG information has a positive association with corporate efficiency at the moderate disclosure level, rather than at the high or low disclosure level. Governance information disclosure has the strongest positive linkage with corporate efficiency, followed by social and environmental information disclosure. Moreover, we explored the relationship between particular ESG activities and corporate financial performance (CFP), including corporate efficiency, return on assets, and market value. We found that most of the ESG activities reveal a nonnegative relationship with CFP. These findings may provide evidence about voluntary corporate social responsibility strategy choices for enhancing corporate sustainability.     

Is environmental innovation conducive to corporate financing? The moderating role of advertising expenditures

Environmental innovation is an important way for firms to achieve sustainable development and acquire resources. Based on the stakeholder, resource dependence, and signal transmission theories, this study divided environmental innovation into substantive and strategic eco‐innovation and constructed a relationship model among environmental innovation, advertising expenditures, and corporate financing. Selecting 162 Chinese manufacturing listed companies from 2012 to 2017 as the research sample and adopting the multiple regression analysis method, the study found that substantive eco‐innovation had a positive effect on corporate financing, but strategic eco‐innovation had a significant negative effect on corporate financing. Further, advertising expenditures played a positive moderating role between substantive eco‐innovation, strategic eco‐innovation, and corporate financing. The robustness test further confirmed these results.     

Are firms ready to use big data analytics to create value? The role of structural and psychological readiness

In this study, we leverage Information Technology (IT) readiness literature and resource-based view (RBV) to investigate the impact of firm structural and psychological readiness on firm value creation, as mediated by big data analytics usage. The proposed research model is empirically validated using survey data from 179 senior IT managers. The findings demonstrate the importance of both structural (i.e. IT infrastructure capability, tools functionality, employee analytical capability, and bigness of data) and psychological readiness (i.e. IT proactive climate) in enhancing firm value creation through big data analytics usage. These results provide interesting theoretical and practical insights.     

Can environmentally oriented CEOs and environmentally friendly suppliers boost the growth of small firms?

The core question addressed in the natural resource‐based view (NRBV) of the firm is how to develop and exploit resources beneficial for both the natural environment and firm performance. Due to the resource constraints and increased competition facing small manufacturing firms, achieving this is a challenge for such companies. Building on the NRBV and resource orchestration literatures, we examine the relationship between green purchasing capabilities (GPCs), CEO's environmental orientation (EO), and firm growth. Results from 304 Swedish small manufacturing firms indicate a significant relationship between GPC and growth, and this relationship is positively moderated by the EO of the CEO.     

Board gender diversity and environmental,social, and economic value creation: Does family ownership matter?

Prior literature on firm value creation for stakeholders has oversimplified and narrowed the concept of value down to “economic returns.” Although economic returns are fundamental to a firm's core stakeholders (i.e., shareholders), other legitimate stakeholders want “value” beyond economic returns. We define stakeholder value as the financial and nonfinancial returns a firm can offer to its legitimate stakeholders, and empirically investigate whether board gender diversity (BGD) improves our multidimensional measure of value. Using Thomson Reuters' ASSET4 data for U.K.‐listed firms available from Eikon for the period 2007–2017, we report a significant positive relationship between BGD and stakeholder value creation. In particular, BGD increases social and environmental value creation in addition to economic returns. Furthermore, our results suggest that even though gender‐diverse boards are associated with stakeholder value creation in family firms, this is only conspicuous for environmental value creation. The findings suggest that although female directors cater to the interests of broader stakeholder groups, family ownership causes them to mainly focus on environmental stakeholders. The study provides important implications for regulators, stakeholders, and academic scholars.     

Why are some family firms not innovative?: Innovation Barriers and Path Dependence in Family Firms

Although scholars have recognized the importance of innovation in family firms, the literature on family firm innovation tends to generally depict family firms as either ‘good’ or ‘bad’ for innovation, or focus on the factors with the potential to positively stimulate family firm innovation. Drawing on path dependence theory, this study focuses specifically on what family-specific barriers work against innovation in family firms. To that end, we follow a qualitative theory-building approach due to the limited amount of extant theory, and study a sample of four family businesses headquartered in Spain and Uruguay. The related propositions and theoretical contributions emerging from our study are shared in the concluding section.     

Market orientation practices enhancing corporate environmental performance via knowledge creation: Does environmental management system implementation matter?

The academic literature on environmental management has provided extensive insights into the determinants of corporate environmental performance. However, few empirical studies have explored whether and how three core components of corporate market orientation (i.e., customer orientation, competitor orientation, and interfunctional coordination) affect environmental performance. Building on institutional theory and the absorptive capacity perspective, this study investigates the relationships among market orientation, knowledge creation, and environmental performance, as well as the moderating effects of environmental management system implementation. On the basis of survey data from 237 Chinese manufacturing firms, we used hierarchical multiple regression analyses to test the hypotheses. The findings indicate that knowledge creation completely mediates the influence of competitor orientation on environmental performance and partially mediates the influence of customer orientation and interfunctional coordination on environmental performance. In addition, environmental management system implementation positively moderates the relationship between knowledge exchange and environmental performance.     

How do institutional shareholders manipulate corporate environmental strategy to protect their equity value? A study of the adoption of ISO 14001 by Egyptian firms

Theoretical as well as empirical evidence regarding the influence of institutional ownership on corporate environmental strategy not only is inconclusive but also reflects experience from either the Anglo‐American context or other developed countries. The underlying assumption of most of this literature is that institutional shareholders are always ‘active’ or ‘passive’ in their actions towards corporate environmental strategy. However, this study argues that this relationship might be moderated by various motivations such as legitimizing existence and operations, conforming with industry norms or lessening managerial entrenchment. Econometric analysis, using a sample of Egyptian firms, as hypothesized, demonstrated that institutional ownership exerted positive and significant effects on a corporation's tendency to adopt environmental management standards only when financial resources are available and investment opportunities are limited. A possible explanation of this finding is that Egyptian institutional investors are more likely to use corporate environmental responsibility to offset their inability to confront managerial discretionary power. An implication of this finding is that not only will different types of stakeholder ask for different levels of social and environmental responsibility, but also the same type of stakeholder may ask for different levels of social and environmental responsibility in different contexts. Copyright © 2009 John Wiley & Sons, Ltd and ERP Environment.     

Monitoring effect of transparency: How does government environmental disclosure facilitate corporate environmentalism?

Environmental information transparency is a key policy instrument in environmental governance, which has been emphasized in most of the literature. Although a large body of research has focused on its role at the national or industrial level in the developed countries, few studies have extended it to emerging economies and tested its role in the subnational context. In this paper, we have empirically examined how government environmental disclosure shapes corporate environmentalism in the context of China. It is argued that the information transparency of government environmental disclosure can promote corporate environmentalism by providing supports for governments' decision‐making of environmental governance, the activeness of environmental nongovernment organizations, and the participation of general public in environmental issues. Especially, we have highlighted two kinds of influences on focal relationship: booster role of bureaucratic capability in the diffusion of environmental institutional pressure and receiver role of organization slack and industrial competition in the perception of environmental institutional pressure. Using a panel dataset of Chinese publicly listed firms from 2008 to 2015, a positive relationship between government's environmental information transparency and corporate environmentalism is found. In addition, our result has shown that this relationship will be stronger for regions where government bureaucracy capabilities are stronger. This study contributes to understanding of the process of firms' strategic choice facing environmental and institutional changes in emerging economies.     

The more the merrier? Network portfolio size and innovation performance in Nigerian firms

A positive relationship between firms' networking activities and innovativeness has been consistently established in the literature on innovation. However, studies considering different innovation types, and on developing countries are scarce. This paper addresses questions concerning the relationship between networking strategies and innovativeness of firms, using innovation survey data on Nigerian firms. Quantile regression is applied to trace the link between portfolio size and innovation at different levels of innovative success. The results show a positive relationship between a firm's innovation performance and the size of its networking portfolio. This relationship varies across different innovation types and with increasing innovation performance. The findings suggest that the widely accepted portfolio approach to external search for knowledge is not necessarily always the best—its utility depends on the firm's current level of innovative success. This poses a challenge for open innovation.     

‘Types’ of private family firms: an exploratory conceptual and empirical analysis

Family firms that can leverage entrepreneurial experience and knowledge can shape local economic development. Practitioners concerned with fostering enterprise sustainability need to be aware that family firms cite contrasting goals, resource profiles and requirements. Family firms are not a homogeneous entity. The ‘targeting’ of support to ‘types’ of family firms could enable practitioners to satisfy their wealth creation and social inclusion objectives. To stimulate increased critical reflection, insights from agency and stewardship theories were drawn upon to illustrate six conceptualized ‘types’ of private firms based on company ownership and management structures as well as company objectives. Cross-sectional survey evidence was gathered from key informants in family firms in the UK. An agglomerative hierarchical QUICK CLUSTER analysis identified seven empirical ‘types’ of family firms. Four out of the six conceptualized ‘types’ were validated by the exploratory empirical taxonomy. Implications for policy-makers and practitioners as well as researchers are discussed.