Environmental Sustainability in Family Firms: Environmental Orientation and Stakeholder Engagement

This study contributes to the debate on family business environmental sustainability. By investigating the environmental orientation of family versus non-family firms, we aim to clarify the ambiguous extant evidence on family businesses’ environmental behaviour. We build on the literature on firm responses to institutional pressures and distinguish a ceremonial and a substantive approach to environmental sustainability. Accordingly, we test whether the family firm status affects the decision to invest in one rather than more initiatives aimed at environmental sustainability, these being proxies for a ceremonial rather than a substantive commitment. Moreover, we investigate whether these effects are contingent on the firm’s engagement with policymakers and past performance. Data on 162 European manufacturing firms from the Carbon Disclosure Project and ORBIS database has been collected. Our results show that family firms are more likely than non-family firms to take a substantive environmental orientation, committing resources to several initiatives. When we consider engagement with policymakers, we find that family firms take extreme positions on the ceremonial-substantive continuum of environmental orientation. Nevertheless, their engagement with policymakers pushes them toward a more balanced environmental orientation than non-family firms. Instead, a positive performance trend increases the likelihood of substantive commitment toward environmental sustainability.