Sustainability in family business: Mechanisms, technologies and business models for achieving economic prosperity, environmental quality and social equity

Highlights

• Sustainability has become a major issue for all kinds of firms.

• Sustainability includes achieving economic, ecological and social goals.

• Most firms are family firms, but only little is known about their approaches to sustainability.

• We categorize existing research about sustainability in family firms.

• We provide three relevant research areas for future research.

Abstract

Enhancing sustainability in terms of a simultaneous pursuit of economic, ecological and social goals has become a key requirement for firms across industries and countries. Although many studies have focused on multiple aspects surrounding the topic of sustainability such as mechanisms, technologies and business models, little is known about sustainability in family businesses. This constitutes a relevant research gap as most firms in western societies are family firms and as such are associated with unique characteristics that differentiate their governance, structures, and behaviors from non-family firms. We address this gap by providing a categorization of three relevant research areas that will be relevant to further contribute to understanding sustainability in family business: antecedences of sustainability, management of sustainability and bargaining from sustainability.

Introduction

Despite the immense technological progress and the general prosperity of the western society, we currently face several ecological and social grand challenges such as climate change, poverty, hunger etc. (Godfray et al., 2011; Howard-Grenville et al., 2014). Many of these challenges were further accelerated by the recent COVID-19 pandemic, as social and economic consequences reduced global wealth and increased social disparity (He and Harris, 2020). These challenges are too complex and wicked to be solved by single actors, but rather call for collective contributions of governmental, individual and corporate players (Olsen et al., 2016). In order to provide guidelines for these actors, the United Nations (2020) have recently agreed on a set of 17 sustainable development goals (SDGs) that are defined to provide a “a shared blueprint for peace and prosperity for people and the planet, now and into the future”. These goals provide a comprehensive view on sustainability that incorporates ecological, social and economic perspectives. Besides those governmental initiatives, the perceived need to address sustainability challenges created an increasing peer pressure as well as new customer demands forcing firms to embrace sustainability, which requires the integration of social and ecological goals into commercial business activities (Zollo et al., 2013).

Recent research in business and management addressed the topic of sustainability from various perspectives and units of analysis (Fellnhofer et al., 2014). Studies have demonstrated the long-term effects of adopting sustainability practices on organizational processes and performance (Eccles et al., 2014). These focused for example on the development of sustainable innovation (Biondi et al., 2002; Dangelico et al., 2013) or the use of new technologies in improving the sustainability of firms (Dao et al., 2011; Rohracher, 2001). By contrast, sustainability was related to the sustainable design of organizational value creation processes such as internal manufacturing (Rusinko, 2007) or the supply chains and interorganizational collaborations of the organization (Linton et al., 2007; Wu and Pagell, 2011). More recently, increased attention was directed to more holistic sustainability transitions in which firms systematically integrate sustainability into their organization and business model design (Abdelkafi and Täuscher, 2016; Morioka et al., 2017). Scholars have raised the issue that pursuing ecological, social and economic goals simultaneously can create substantial paradox tensions as firms need to combine more than one institutional logic, i.e. doing good and doing well (Kraus et al., 2021; Schneider and Clauß, 2019; Spieth et al., 2019).

Previous research has demonstrated that sustainability is of particular importance for family firms, and that family ownership may foster particular dimensions of sustainability whereas others are hindered (Adomako et al., 2019; Block and Wagner, 2014). Family firms were also regarded as an important force in the proactive mitigation of climate change (Sharma and Sharma, 2011). Prior research highlights that family firms have a tendency towards a sustainably responsible behavior as compared to non-family firms (Blodgett et al., 2011), and to giving a high priority to non-financial goals such as longevity, preservation of family reputation, responsibility for employees, and impact on the environment (Stafford et al., 1999; Zellweger et al., 2013), thus having characteristics that are in favor for changes towards sustainability. Family firms are considered to be a special type of firm, as the identity and values of founders and/or the founder family have significant influence on the orientation of these firms (e.g., García-Álvarez and López-Sintas, 2001; Kraus et al., 2011). This distinctive nature of family firms can facilitate flexibility, intense customer-orientation and community involvement (Aronoff, 1998; Litz and Stewart, 2000). By contrast, family firms are also often described as conservative, risk-averse and hence reluctant to change (Calabrò et al., 2019; Gómez-Mejía et al., 2007).

Although previous research has provided us with important insights on sustainability contributions of firms and on the general tendencies of family firms towards sustainability and change, the two areas have not yet been systematically integrated in research so far. Given that approximately 70–90% of firms globally are considered to be family firms (Kraus and Harms, 2011), in light of the grand sustainability challenges for businesses and society ahead of us, this constitutes a research gap of a significant practical and consequently academic relevance.

Several studies have empirically demonstrated that family firms achieve a greater corporate social responsibility (CSR) than non-family firms (e.g., Block and Wagner, 2014; Dyer Jr and Whetten, 2006; Gallo, 2004). Furthermore, previous research investigated the motivational schemas in family firms towards sustainability issues. The concept of socioemotional wealth (SEW) highlights that family owners are concerned with additional motives related to sustainability, such as the status of the family business in the local community or the consistency of actions with the family identity besides financial goals (Cesinger et al., 2016; Gómez-Mejía et al., 2007). Transgenerational sustainability of family firms favors exchange systems in which collective benefits and reciprocity are important (Long and Mathews, 2011). Further studies at the intersection of family business research and sustainability address more eclectic topics such as the financing of sustainability in family firms (Xiang et al., 2019, 2020) or the role of board gender diversity (Cordeiro et al., 2020; Nadeem et al., 2020). Despite these contributions, the literature lacks theoretical understanding and empirical evidence regarding how sustainability can be effectively integrated in family firms.

Consequently, this special issue aims to provide a more comprehensive integration of sustainability and family firms towards a more fundamental understanding of sustainable family firms. We integrate studies from various theoretical perspectives, based on data from family firms across various cultural and institutional contexts. Together, we contribute to research on sustainability in family business by providing new insights into three broader perspectives: 1) antecedences of sustainability, 2) management of sustainability, and 3) bargaining from sustainability (Fig. 1).