Family Involvement and Financial Performance: How Do They Affect the Sustainability Commitment of Family Businesses?

Abstract

The socio-emotional wealth (SEW) perspective suggests that the specific priorities of a family business may make it more or less inclined to engage in sustainable practices. This paper examines how family business heterogeneity regarding family ownership, financial performance, and family board members affects the sustainability commitment of a sample of listed European family businesses. We estimate a partial least squares (PLS) model, the results of which indicate that a higher level of family ownership reduces sustainability commitment, whereas better financial performance increases it. Furthermore, family board members do not appear to moderate the family ownership–sustainability commitment relationship. Our findings provide novel theoretical insights into the impact of family business heterogeneity on sustainability practices and advance the debate on the factors promoting these practices in European family firms. These contributions offer valuable guidance for managers, investors, consultants, and regulators of family firms in decision-making and policy implementation.