Sustainability Practices in Australian Firms: The Effect of Family Control and the Generational Stage

• Main Authors: Carlos Fernández-Méndez, Rubén Arrondo-García
• Format: Article
• Language: English
• Published: MDPI AG 2021-01-01
• Series: Sustainability
• Subjects: family control; socioemotional wealth; generational stage; sustainability
• Online Access: https://www.mdpi.com/2071-1050/13/3/1244

This paper examines the effects of family control on a firm’s adoption of sustainability practices, with special attention given to the heterogeneity of the family business derived from the generational stage of the company. Using a panel of 166 Australian companies listed between 2011 and 2018, we found that family businesses have lower sustainability scores compared to non-family businesses, according to the predictions of the socioemotional wealth (SEW) approach. For a subsample of family businesses, we found that multi-generational family businesses score better on sustainability than firms managed by the founders (first-generation). The SEW perspective could explain the effects of family control based on the pursuit of non-economic goals and the higher risk-aversion of family businesses. The decline in non-economic goals resulting from the ageing of the company stimulates the adoption of better sustainability practices. The generational stage of a family business could be a moderator of the relationship between family control and the adoption of sustainability practices and is a central element in explaining the disparity in the sustainability policies within family businesses.