Governing for Good? Exploring ESG Challenges in Family-Owned, Dual-Led Enterprises

Abstract

The impact of family ownership and dual leadership on ESG performance is significant, influencing corporate governance, strategic direction, and stakeholder engagement. Empirical evidence from 43 countries, spanning the period 2015–2023, suggests that family-owned firms generally underperform in ESG practices. This deficiency is particularly pronounced in the Governance (G) dimension, affecting key areas such as Corporate Social Responsibility (CSR) strategy, shareholder relationships, and management oversight. The concentration of power associated with dual leadership—combining both CEO leadership and ownership—can be equally or more detrimental to ESG outcomes than family ownership alone. This consolidation often leads to ESG underperformance, even if a family firm’s overall performance otherwise matches that of its peers. Beyond ownership and leadership structures, several external factors also shape ESG practices. Company size and sector can play relevant roles. Furthermore, the national context is crucial: countries with higher levels of human well-being may exhibit greater awareness and adoption of ESG standards, while the income level and geographic location of a country can have a considerable impact on enterprise scores. These findings suggest that practitioners should separate CEO and owner roles to reduce ESG risks, while policymakers should create targeted incentives/regulations for family firms to boost ESG integration.