How are stakeholders influencing family firms' environmental orientation? A comparison with non-family firms in the European context

This study contributes to the debate on family business environmental sustainability by investigating the environmental orientation of family versus non-family firms. We build on the literature on firm responses to institutional pressures and distinguish a ceremonial and a substantive environmental orientation. Accordingly, we test whether the family firm status affects the decision to incentivise one rather than multiple activities aimed at environmental sustainability, these being proxies for a ceremonial rather than a substantive environmental orientation. Moreover, we investigate whether these effects are contingent on the firm’s engagement with external and internal stakeholders. Data on 162 European manufacturing firms from the Carbon Disclosure Project and Orbis database have been collected. Our results show that family firms are more likely than non-family firms to have a substantive environmental orientation, that is to incentivise multiple environmentally friendly activities. However, we find that family firms show an environmental orientation closer to that of non-family firms, when they engage with policymakers. Finally, when engaging with employees on environmental sustainability issues, family firms are more reluctant to show a ceremonial environmental orientation than non-family firms.