University of Surrey Study Highlights the Influence of Family Ownership on Corporate Environmental Performance.
New research from the University of Surrey's Business School indicates that family ownership, especially when the family name is involved, has a positive impact on a business's commitment to environmental responsibility.
The study, conducted by researchers from Surrey Business School, explores the correlation between family ownership and the adoption of the ISO 14001 standard—a widely recognised framework for measuring environmental impact.
Professor Tazeeb Rajwani, Head of the Department of Strategy and International Business at the University of Surrey and co-author of the study, underlines the intertwining of economic motives and family values in family-owned businesses.
While the primary goal of any business is to generate shareholder value, family-owned businesses, driven by a desire to preserve socioemotional wealth and ensure the firm's longevity across generations, are found to actively pursue initiatives benefiting their local community and environment.
"The immediate objectives of family-owned firms are intertwined with socioemotional aspirations, leading them to conform to institutional expectations such as the ISO 14001 criteria," notes Professor Rajwani.
The research also reveals that the positive effect of family ownership is more pronounced when the family name is part of the business identity. Additionally, businesses located in proximity to large cities show a stronger inclination towards environmental responsibility. The family name is identified as a crucial symbolic characteristic, fostering a sense of identification with society among family members.
Professor Rajwani highlights the importance of understanding the influence of non-financial objectives on strategic decisions in family-owned firms, especially for investors prioritising profit maximisation. Managers, whether family members or not, are urged to recognise the potential impact of family motives on strategic decisions, which may align more with socioemotional aspirations than direct profitability goals.
These findings extend beyond the realm of investors and managers, carrying implications for environmentally conscious stakeholders, including consumers and suppliers associated with family-owned businesses. As businesses are increasingly scrutinised for their environmental practices, understanding the nuanced motivations within family-owned firms becomes crucial for all stakeholders involved.
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