Contenu connexe
Similaire à Beq21 2 6 (20)
Beq21 2 6
- 1. DRIVERS OF PROACTIVE ENVIRONMENTAL STRATEGY IN FAMILY FIRMS
Pramodita Sharma
Professor, John Molson School of Business
Concordia University, Montreal, Canada
psharma@jmsb.concordia.ca
Sanjay Sharma
Dean, John Molson School of Business
Concordia University, Montreal, Canada
ssharma@jmsb.concordia.ca
For publication consideration in the
Special Issue of
Business Ethics Quarterly
Stakeholder theory, Ethics, Corporate Social Responsibility, and Family Enterprise
Edited by: Bradley R. Agle, James J. Chrisman, Ronald K. Mitchell, & Laura Spence
We thank James J. Chrisman, Ronald K. Mitchell, Laura J. Spence and an anonymous reviewer
for valuable comments and guidance on earlier versions of this article. In addition, we gratefully
acknowledge the funding support from Concordia University’s Seed Funding Program and the
1
Copyright © Society for Business Ethics. This is a non-copyedited version of a paper forthcoming in Business Ethics Quarterly.
It is available for personal scholarly use only. Any other use is subject to the same permissions terms as articles published in BEQ.
- 2. David O’Brien Center for Sustainable Enterprise for this research project.
2
Copyright © Society for Business Ethics. This is a non-copyedited version of a paper forthcoming in Business Ethics Quarterly.
It is available for personal scholarly use only. Any other use is subject to the same permissions terms as articles published in BEQ.
- 3. DRIVERS OF PROACTIVE ENVIRONMENTAL STRATEGY IN FAMILY FIRMS
ABSTRACT
Globally, family firms are the dominant organizational form. Family involvement
in business and unique family dynamics impacts organizational strategy and
performance. However, family control of business has rarely been adopted as a
discriminating variable in the organizations and the natural environment (ONE)
research field. Drawing on the theory of planned behavior we develop a
conceptual framework of the drivers of proactive environmental strategy (PES) in
family firms. We argue that family involvement in business influences the
attitudes, subjective norms, and perceived behavioral control of a firm’s dominant
coalition. Together these factors determine the extent of the dominant coalition’s
intentions to undertake PES. Further, family firms with lower levels of
relationship conflict within the controlling family will be more successful in
translating the dominant coalition’s intentions to allocate resources for the pursuit
of PES. Research implications of the theory are discussed.
During the last two decades, organizations and the natural environment (ONE) scholars
have devoted significant efforts to understand the factors that influence the environmental
strategy of a firm. The ONE literature argues that the successful pursuit of a proactive
environmental strategy (PES) or a voluntary strategy that goes beyond-compliance with
environmental regulations requires both positive managerial attitudes/values toward
environmental preservation (motivation) (e.g., Bansal, 2003; Cordano & Frieze, 2000; Sharma,
2000; Sharma, Aragón-Correa & Rueda, 2007) and resource allocations to build and deploy
organizational capabilities (ability) to pursue such strategies (e.g., Aragón-Correa & Sharma,
2003; Christmann, 2000; Hart, 1995; Marcus & Geffen, 1998; McEvily & Marcus, 2005; Russo
& Fouts, 1997; Sharma & Vredenburg, 1998).
The ONE research has been undertaken at different levels of analysis and in varied
contexts such as single and multiple industry settings, manufacturing and service industries,
private and public sector firms, and large and small businesses. However, even in studies that
may have included family controlled businesses, family involvement in the business has rarely
3
Copyright © Society for Business Ethics. This is a non-copyedited version of a paper forthcoming in Business Ethics Quarterly.
It is available for personal scholarly use only. Any other use is subject to the same permissions terms as articles published in BEQ.
- 4. been adopted as a discriminating variable. This omission is notable because the family business
literature makes a strong case for family firms being the dominant organizational form around
the world (e.g., Gersick, Davis, Hampton, & Lansberg, 1997; La-Porta, Lopez-de-Silanes, &
Shleifer, 1999). The family business literature suggests that ignoring the family variable from
organizational research leads to underspecified theoretical models and empirical findings that do
not apply to a large majority of business organizations (Dyer Jr., 2003; Dyer Jr. & Dyer, 2009;
Litz, 1997). A noteworthy exception in the ONE literature is the recent study by Berrone, Cruz,
Gomez-Mejia, & Kintana (2010) that reports better environmental performance for family
controlled public firms in the U.S. as compared to non-family firms. This study reinforces the
growing evidence that family firms are fundamentally different from non-family firms
(Chrisman, Chua and Sharma, 2005). The Berrone et al. study and the family business literature
collectively point to a research opportunity for examining business phenomena such as corporate
environmental strategy using a family business lens, with a potential to lead to fresh insights.
Family firms introduce a dynamic of personalized control that is different from the
institutionalized control in non-family firms, significantly affecting the strategic orientation and
processes of these firms (Arregle, Hitt, Sirmon & Very, 2007; Chrisman et al, 2005; Miller &
Le-Breton Miller, 2005). Family firms are governed by a dominant coalition. While the dominant
coalition in a family firm is similar to a top management team (TMT) in a professional firm, its
aim is to pursue the controlling family’s vision for the firm. The dominant coalition in family
firms consists either of family members or a combination of family and non-family members
who are appointed by the controlling family, indicating the strong family influence on the
members of the dominant coalition and on the firm’s strategy (Chua, Chrisman & Sharma,
1999). Thus, the controlling family influences both of the major factors identified in ONE
4
Copyright © Society for Business Ethics. This is a non-copyedited version of a paper forthcoming in Business Ethics Quarterly.
It is available for personal scholarly use only. Any other use is subject to the same permissions terms as articles published in BEQ.
- 5. research as being important for pursuit of a PES: managerial attitudes/values (motivation) and
resource allocation decisions to build organizational capabilities (ability). The respondents in
ONE research have mainly been individual managers, whether middle managers or members of
the TMT. As we argue above, the focusing on the dominant coalition in a family firm is likely to
reveal fresh insights into the motivations and ability of family firms to pursue a PES.
To illustrate, although ONE scholars have long argued for a significant relationship
between individual managerial beliefs and values towards environmental preservation and their
firms’ engagement in PES (Hart, 1995), this linkage has not yet been conclusively supported in
empirical studies (Bansal, 2003; Bansal & Roth, 2000; Cordano & Freize, 2000). One possible
explanation is that this research has been focused on middle level environmental managers who
have limited control over resource allocation decisions of the firm to undertake environmental
practices (Ashford, 1993; Cebon, 1993; Cordano & Frieze, 2000). This suggests the importance
of understanding the factors that influence the intentions of the dominant coalition that controls
organization strategy and resource allocation decisions – a task we undertake in this article.
The lack of a significant relationship between managerial values/beliefs and strategy may
be because ONE research does not examine family control as a variable in its models. In non-
family firms it is very difficult to link individual level beliefs, values and attitudes with
organizational level strategy without examining processes that translate these beliefs into deep-
rooted and pervasive organizational and cultural change. In contrast, in family firms, the long
tenures of the leadership and the controlling family’s influence on the firm’s dominant coalition
enables easier permeation of individual and family values into the firm’s resource allocation
decisions (McConaughy, 2000; Ward, 1987). This influence is accentuated by the significant
ties, at times extending over generations, of the controlling family on the firm (Miller & Le-
5
Copyright © Society for Business Ethics. This is a non-copyedited version of a paper forthcoming in Business Ethics Quarterly.
It is available for personal scholarly use only. Any other use is subject to the same permissions terms as articles published in BEQ.
- 6. Breton Miller, 2005). Thus, family dynamics and influence has relevance for endogenous drivers
that influence an organization’s ability to allocate resources for the pursuit of a PES.
On its part, the family business literature has undertaken very limited research focused on
ethical, social, or environmental behavior of family firms. The few studies on this topic suggest
that due to a strong identification with the firm name by the dominant coalition, family firms
exhibit higher levels of corporate social and community citizenship behaviors (Craig & Dibrell,
2006; Dyer Jr. & Whetten, 2006; Post, 1993). However, this research has not yet examined the
factors that enable the resource allocation decisions to pursue a PES. Drawing from the ONE,
family business, strategic management, and social psychology literatures, we develop a multi-
level theoretical framework of factors that enable firms to allocate resources and build
capabilities for the successful pursuit of PES.
Based on the theory of planned behavior (Ajzen, 1991) we argue that dominant coalitions
in firms with higher levels of family involvement in business are more likely to have stronger
intentions to pursue a PES. As compared to dominant coalitions (TMTs) in non-family firms,
these coalitions are likely to: 1) harbor positive attitudes towards environmental preservation, 2)
believe that subjective norms favor pro-environmental activities in their firm, and 3) perceive
higher levels of behavioral control to pursue such activities. This is because of the significant and
long lasting influence of the family on the dominant coalition, longer leadership tenures of
family members in family firms, long term strategic and decision-making orientation of these
firms, higher motivation to accumulate socio-emotional wealth for future generations, and a
strong identification of the family with the firm (e.g., Berrone et al., 2010; Dyer Jr. & Whetten,
2006; Gomez-Mejia, Haynes, Nunez-Nickel, Jacobson, and Moyano-Fuentes, 2007; Miller &
Le-Breton Miller, 2005).We further suggest that dominant coalitions in family firms controlled
6
Copyright © Society for Business Ethics. This is a non-copyedited version of a paper forthcoming in Business Ethics Quarterly.
It is available for personal scholarly use only. Any other use is subject to the same permissions terms as articles published in BEQ.
- 7. by a family with lower levels of relationship conflict will be more likely to translate these
intentions into investment in resources needed to pursue a PES. These relationships are depicted
in Figure 1.
In the next section, we clarify the scope of this article by discussing the unique features
of the organizational form of interest to us: family businesses. We then elaborate on the
philosophical differences between the literatures on business ethics and ONE with regards to the
environmental strategy of a firm. The following section develops a theoretical framework to
explain why firms with higher levels of family involvement in business are more likely than
other firms to exhibit positive intentions for undertaking proactive environmental strategies. The
role of the level of relationship conflict within the controlling family on the ability of the
dominant coalition to successfully deploy resources for the pursuit of PES is examined. The
research implications of the theory developed in this paper are discussed in the last section.
Family Business and Environmental Strategy
A widely accepted definition of family business is “a business governed and/or managed
with the intention to shape and pursue the vision of the business held by a dominant coalition
controlled by members of the same family or a small number of families in a manner that is
potentially sustainable across generations of the family or families” (Chua, Chrisman and
Sharma, 1999: 25). This definition includes two relevant dimensions that make family firms
unique for our theorizing. First, owing to the tenacity of the controlling family’s vision, family
firms can make decisions (via the dominant coalition) in a ‘personalistic’ manner that is
relatively unencumbered by internal bureaucracy, other competing voices in the firm, or external
pressures (Carney, 2005). Second, because of the combination of personalism and a desire to
sustain the vision across generations and retain family control, family firms are likely to act in a
7
Copyright © Society for Business Ethics. This is a non-copyedited version of a paper forthcoming in Business Ethics Quarterly.
It is available for personal scholarly use only. Any other use is subject to the same permissions terms as articles published in BEQ.
- 8. ‘particularistic’ manner (Carney, 2005) substituting rational and economic wealth maximization
objectives for objectives that help accumulate ‘socio-emotional wealth’ (Berrone et al., 2010;
Gomez-Mejia, et al., 2007), reputation and image of the firm (Craig & Dibrell, 2006; Dyer Jr., &
Whetten, 2006; Post, 1993), and/or other objectives that are consistent with the vision of the
controlling family. In comparison to non-family firms, family firms have been found to be more
willing to risk the uncertainty of economic outcomes related to undertaking beyond-compliance
environmental strategies (Berrone et al., 2010; Gomez-Mejia, et al. 2007).
Family business scholars have long viewed family business as composed of two
overlapping sociological systems of family and business (see Sharma & Nordqvist, 2008 for a
review of system models in this literature). It has been argued that there is an ease of
permeability of resources and values between these two systems (Aldrich & Cliff, 2003; Sharma,
2008) that influences strategy. The social and financial capital of the family helps build the
resources and capabilities in a family business (Pearson, Carr, & Shaw, 2008; Steier, 2007).
Similarly, the capital built through the family business has been found to benefit the family (Hoy
& Sharma, 2009). The family business literature distinguishes between the extent of family
involvement in business and the consequences of this involvement (Chua, Chrisman, & Sharma
1999). Two components of family involvement in business have received attention in the
literature: family involvement in ownership and/or management of the firm (e.g., Sciascia &
Mazzola, 2008). The strategy and performance consequences of active family involvement in
business can be positive or negative (Habbershon & Williams, 1999).
On the positive side, family involvement contributes to the building up of competitive
advantage for the firm through higher stocks of social capital and patient financial resources that
enhance the firm’s economic sustainability and longevity (Miller & Le-Breton Miller, 2005;
8
Copyright © Society for Business Ethics. This is a non-copyedited version of a paper forthcoming in Business Ethics Quarterly.
It is available for personal scholarly use only. Any other use is subject to the same permissions terms as articles published in BEQ.
- 9. Sirmon & Hitt, 2003; Tokarczyk, Hansen, Green, & Down, 2007). These resources also
contribute to the achievement of non-economic outcomes such as the preservation of family ties
and trans-generational value creation (Basco & Rodriguez, 2009; Chrisman, Chua & Litz, 2003;
Stafford, Duncan, Dane & Winter, 1999), which affect firm performance (Sharma, 2004).
On the negative side, family involvement in business can be dysfunctional as it adds
complexity to business by intensifying the degree and tenacity of conflicts amongst family
members who may have differences in their visions and goals (Eddleston & Kellermanns, 2007;
Grote, 2003; Sorenson, 1999). In turn, such differences cause confusion in strategic direction and
possible paralysis of action in the dominant coalition as divergent powerful family groups pursue
competing objectives (Gersick et al., 1997). Both the extent of family involvement in business
and its consequences as reflected in the relationship conflicts within the controlling family, are
likely to vary across family firms and within a family firm over time. As we elaborate in our
theory, both these variables play an important role in the environmental strategy of a family firm.
Corporate Environmental Strategy
At the outset, it is useful to distinguish between the environmental and sustainability
strategies of a firm, as these terms are sometimes used interchangeably. While there is lack of
complete consensus amongst scholars, there is a general agreement that a firm’s sustainability
strategy enables it to achieve its economic outcomes while achieving positive social and
environmental impacts (Gladwin, Kennelly & Krause, 1995; Starik & Rands, 1995). A firm’s
environmental strategy is a narrower concept that refers to a firm’s “strategy to manage the
interface between its business and the natural environment” (Aragón-Correa & Sharma, 2003:
71). Therefore, a firm’s sustainability strategy is more holistic as compared to its environmental
strategy. The former is a wider concept that integrates a strategy to achieve simultaneous social
9
Copyright © Society for Business Ethics. This is a non-copyedited version of a paper forthcoming in Business Ethics Quarterly.
It is available for personal scholarly use only. Any other use is subject to the same permissions terms as articles published in BEQ.
- 10. outcomes such as poverty reduction, fair trade, and human rights while reducing the firm’s
environmental footprint and achieving its economic objectives. Although a few vanguard firms
have begun to develop holistic sustainability strategies (e.g., Hart & Sharma, 2004, Kanter,
2009), most firms are focused on reducing their environmental footprint or even more
specifically their carbon footprint. In this paper, we focus on corporate environmental strategy as
our outcome variable because our unit of analysis, family businesses, represents a wide range of
enterprises that are more likely to be at various stages of developing their environmental
strategies rather than holistic sustainability strategies.
A major research stream in the ONE literature attempts to understand the relationship
between a firm’s environmental strategy and its outcomes such as competitive advantage,
innovation, market opportunities, and/or operating legitimacy (e.g., Hart, 1995; Judge &
Douglas, 1998; Klassen & McLaughlin, 1996; Russo & Fouts, 1997; Sharma & Vredenburg,
1998). This literature views a firm’s environmental strategy as one that enables firms to achieve
its economic outcomes while simultaneously reducing their environmental footprint. Thus, this
research diverges from the business ethics literature that views voluntary environmental strategy
as a moral rather than an instrumental choice made by firms (e.g., Orts & Strudler, 2002; Spence,
Jeurissen & Rutherfoord, 2000). The ONE literature also argues that the natural environment is
not an “issue” like other social issues in regard to which a firm has to make moral choices but
rather a systemic multi-level context within which businesses operate and therefore requires
development and implementation of core business strategies (Starik & Rands, 1995; Shrivastava,
1995, 2000). Even though the ONE literature presents mixed evidence for a relationship between
voluntary environmental strategies and economic performance of firms, unlike the business
ethics literature it does not posit that environmental and economic performance of firms are in
10
Copyright © Society for Business Ethics. This is a non-copyedited version of a paper forthcoming in Business Ethics Quarterly.
It is available for personal scholarly use only. Any other use is subject to the same permissions terms as articles published in BEQ.
- 11. conflict. In adopting an instrumental lens to examine why dominant coalitions in family firms are
driven to adopt a PES in order to simultaneously achieve economic and environmental benefits,
this article provides an alternate viewpoint to the ethics literature for strategies that significantly
benefit business and society as a whole.
Another stream of ONE research examines major drivers, exogenous and endogenous,
that influence firms to go beyond regulatory compliance in their environmental strategies. The
drivers include institutional influences (e.g., Hoffman, 1999; Jennings & Zandbergen, 1995),
stakeholder pressures (e.g., Buysse & Verbeke, 2003; Sharma & Henriques, 2005), managerial
interpretations (Sharma, 2000) and attitudes (Cordano & Frieze, 2000), managerial and
organizational values (e.g., Bansal, 2003; Bansal & Roth, 2000), leadership (Egri & Herman,
2000), organizational capabilities (e.g. Aragón-Correa & Sharma, 2003; Christmann, 2000; Hart,
1995; Russo & Fouts, 1997; Sharma & Vredenburg, 1998), organization design (Sharma, 2000),
and organizational identity (Sharma, 2000), among others. This paper contributes to this research
by building theory on endogenous factors influencing environmental strategy in family firms.
In spite of differences in nomenclature, typologies of corporate environmental strategies
can be placed broadly along a continuum that ranges from reactive/pollution control/ regulatory
compliance to proactive /pollution prevention/beyond-compliance/voluntary (Russo & Fouts,
1997; Sharma, 2000). Reactive environmental strategies focus on meeting legal requirements and
implementing pollution controls. Firms pursuing such strategies are driven by instrumental
factors such as avoiding legal sanctions or penalties and negative impacts on a firm’s image or
reputation, etc. (Russo & Fouts, 1997; Sharma, 2000). Proactive environmental strategies (PES)
focus on environmental preservation practices for reducing waste, energy, and material use at
source, which are also known as pollution prevention (Russo & Fouts, 1997; Sharma, 2000).
11
Copyright © Society for Business Ethics. This is a non-copyedited version of a paper forthcoming in Business Ethics Quarterly.
It is available for personal scholarly use only. Any other use is subject to the same permissions terms as articles published in BEQ.
- 12. Higher degrees of proactivity refer to leadership strategies of redesigning products and
processes, and may include the redesign of business models to minimize the firm’s ecological
footprint along the entire operations life cycle and value chain (Aragón-Correa, 1998; Hart,
1995; Roome, 1992). Pursuit of these strategies requires the inclusion of environmental criteria
into decision-making, and the measurement, monitoring and reporting of performance on these
criteria in addition to measuring and reporting economic performance (Gladwin, Kennelly &
Krause, 1995). These are major changes in a firm’s decision-making and operating processes,
and require investments in new organizational resources and capabilities by the dominant
coalition of an organization. Thus, we focus on factors that influence the dominant coalitions’
intentions and abilities to pursue PES.
Arguably, businesses will be motivated to deploy resources and develop capabilities for
undertaking a PES that they can link directly to positive financial outcomes. Indeed, some
studies have shown that reduction in wastes translates into superior financial performance via
cost savings and improved process efficiencies (e.g., Hart & Ahuja, 1996; Judge & Douglas,
1998; Russo & Fouts, 1997). Positive stock price movements have been linked to environmental
awards won by firms (Klassen & McLaughlin, 1996). However, the overall evidence for a
relationship between environmental practices and the financial performance is mixed (e.g.,
Griffin & Mahon, 1997; Margolis & Walsh, 2003).
Despite this mixed scientific evidence, many leading companies around the globe
consistently and enduringly pursue increasingly more advanced environmental strategies over
time, often reaping significant long-term economic as well as non-economic performance
advantages. Often cited examples include firms such as SC Johnson Co. and Ford Motors—both
are family firms though this important factor has not received scholarly attention in the ONE
12
Copyright © Society for Business Ethics. This is a non-copyedited version of a paper forthcoming in Business Ethics Quarterly.
It is available for personal scholarly use only. Any other use is subject to the same permissions terms as articles published in BEQ.
- 13. literature. SC Johnson Co. has endeavored to be a good corporate citizen throughout its history.
It has pursued a PES consistently over the last three decades regardless of changes in its business
environment or its leadership. At Ford, Bill Clay Ford Jr.’s assumption of the leadership as CEO
of Ford marked the beginning of a PES focused on lowering the environmental footprint of the
giant company. This strategy has endured in spite of the difficult times that the North American
auto industry has gone through in recent years. It is remarkable that Ford is the only one of the
big three US auto firms that did not require a bailout from the US government in 2008-09. At the
January 2010 North American Auto Show at Detroit it received several awards and accolades for
its hybrid and electric cars. At the same time Ford is proactively reducing the ecological footprint
of its supply chain, processes, physical facilities, and operations.
Against the backdrop of such examples, could it be that family firms are better positioned
as compared to non-family firms to embrace and exploit the multi-faceted performance
advantages of engaging in a PES? Perhaps if the family influence and control is examined as a
variable in ONE research, we could develop a more robust understanding of the linkage between
a firm’s environmental strategy and its economic performance via an understanding of how
dominant coalitions translate their attitudes for environmental preservation into resource
allocation decisions to build and deploy organizational capabilities for a PES.
ONE research provides empirical evidence to suggest that the managers’ interpretations
of environmental issues either as opportunities or threats affects their expectations of future
strategic value of investments or the deployment of resources and capabilities to undertake
environmental practices and technologies (Sharma, 2000). To overcome managerial biases and
avoid conflicts, firms use routines and processes (i.e., capabilities) to facilitate decisions
regarding resource and capability deployment, and align these decisions with the guiding values
13
Copyright © Society for Business Ethics. This is a non-copyedited version of a paper forthcoming in Business Ethics Quarterly.
It is available for personal scholarly use only. Any other use is subject to the same permissions terms as articles published in BEQ.
- 14. of the dominant coalition or the TMT (Amit & Schoemaker, 1993; Bansal, 2003; Gavetti, 2005).
As the beliefs and values of the controlling family exercised via the dominant coalition of a firm
guide the development and deployment of capabilities, in the next section we look for insights in
the theory of planned behavior to examine how these beliefs and values influence organizational
outcomes and behavior.
Proactive Environmental Strategy (PES) as Planned Behavior
By its very definition, PES is a planned behavior as it is neither reactive not
serendipitous. Thus, we use Ajzen’s theory of planned behavior (1985; 1991) to develop an
exploratory theoretical framework of the drivers of PES in family businesses. This theory posits
that intentions influence actual behavior by indicating the extent of effort an individual is willing
to exert towards a particular action such as investing the firms’ resources to build organizational
capabilities to pursue a PES. In turn, intentions are determined by three factors: individual
attitudes toward a behavior (e.g., environmental preservation), subjective norms or perceptions
of the important referents’ evaluation of the behavior (e.g., whether environmental preservation
activities should be pursued within the firm), and perceptions of behavioral control, that is, the
ease or difficulty with which an individual can engage in environmental preservation activities
within the firm.
Ajzen’s theory (1985; 1991) has been employed to understand behavioral intentions of
environmental managers in non-family firms (Cordano & Frieze, 2000), and succession related
behaviors of leaders in family firms (Sharma, Chrisman, & Chua, 2003). In these studies, a
significant positive influence of conformance with subjective norms and perceived behavioral
control on intentions was revealed. In the Cordano and Frieze study, environmental managers’
attitudes positively influenced their intentions to engage in beyond-compliance pollution
14
Copyright © Society for Business Ethics. This is a non-copyedited version of a paper forthcoming in Business Ethics Quarterly.
It is available for personal scholarly use only. Any other use is subject to the same permissions terms as articles published in BEQ.
- 15. prevention behaviors. However, their actual behavior was restricted due to their status as junior
managers and hence their limited influence on resource allocation decisions (Cordano & Freize,
2000). This suggests a need to understand the behavioral influences of the dominant coalition of
the firm who control resource allocation decisions rather than middle- or junior-level managers.
As depicted in Figure 1, our core thesis is that the involvement of family in business
influences the attitudes of individuals in the dominant coalition, and their perceptions of the
prevailing social norms and control over activities in a firm. That is, family involvement
influences the prevailing attitudes of individuals toward environmental preservation, norms of
whether or not it is appropriate to use the firm as a vehicle for environmental preservation
practices, and the extent of control they have to successfully undertake these activities. Together
these factors determine the intentions of the dominant coalition to undertake PES. We further
posit that the extent of relationship conflict in the controlling family, will moderate the ability of
the dominant coalition of the firm to translate these intentions into actions to allocate resources
to build and deploy organizational capabilities to pursue an enduring PES. These arguments are
developed in depth below.
Family involvement in business
Although family firms are distinguished from their non-family counterparts based on the
significant influence of family on business, the family business literature highlights the
heterogeneity within family firms (e.g., Sciascia & Mazzola, 2008; Sharma & Nordqvist, 2008;
Ward, 1987). The extent of family involvement in the ownership, management, and governance
of the business can vary significantly from one family firm to another and within the same family
firm over time. For example, in some founder-led firms such as ‘lone founder’ firms (Le-Breton
Miller and Miller, 2008), there may be no involvement of family in the business, while in others
15
Copyright © Society for Business Ethics. This is a non-copyedited version of a paper forthcoming in Business Ethics Quarterly.
It is available for personal scholarly use only. Any other use is subject to the same permissions terms as articles published in BEQ.
- 16. all members of a family may pitch in their time, talent, and resources to help launch and grow the
venture (Hoy & Sharma, 2009). Across generations, while some retain the concentrated
leadership format where the controlling family occupies key ownership, management, and
governance positions, others evolve into sibling partnerships or cousin consortiums with no
dominant leader. Still others separate the management and ownership roles with family
essentially becoming an investor in the firm using non-family managers to lead the operating
business (Gersick et al., 1997).
In this article, our interest is to understand how family involvement in business influences
the dominant coalitions’ intentions to engage in PES and their ability to convert these intentions
into actions to allocate resources to build organizational capabilities to pursue a PES. In our
theorizing, we distinguish between four degrees or extent of family involvement in business: (i)
Family owned and managed firms with concentrated family involvement in ownership,
management, and governance of the firm; (ii) Family managed firms where the family dominates
the top management team though ownership may be dispersed; (iii) Family owned firms where
the CEO position is held by a non-family member but the family holds controlling ownership
(Ward, 1987); and (iv) an absence of family involvement.
Family involvement and dominant coalition attitudes
The social psychology literature suggests while attitudes are fairly stable evaluative
tendencies to respond or behave in a consistent manner, they are influenced by individuals’
beliefs and values (John & Saks, 2008; Jones & Gerard, 1967). While beliefs are assumptions or
perceptions about reality, values are a tendency to prefer certain state of affairs over others,
signaling what we consider good or bad, desirable or undesirable (Rokeach, 1973). For our
theorizing, it is the beliefs and values of individuals in the dominant coalition toward
16
Copyright © Society for Business Ethics. This is a non-copyedited version of a paper forthcoming in Business Ethics Quarterly.
It is available for personal scholarly use only. Any other use is subject to the same permissions terms as articles published in BEQ.
- 17. environmental preservation that are likely to influence their attitudes towards using the family
firm as a vehicle for an environmental strategy.
An individual’s beliefs and values have been found to be formed early in life and remain
relatively stable over the course of life (Judge & Bretz, 1992). The family into which one is born
or adopted at a young age offers unique opportunities that extend over several years, to imbue
parental values into family members (Giddens, 1984; Hoy & Sharma, 2009). For example, a
dialogue over a meal, or during a vacation, or during a drive to school can guide the beliefs and
values of the next generation of family members. Furthermore, the behaviors of senior family
members and also family legends help reinforce the values held sacrosanct by the family. Junior
generation members can also influence family beliefs as they bring new external knowledge and
discuss it with other family members. The multiple opportunities for communication and
exchange of ideas within a family help in the unification of thoughts and beliefs. This suggests a
high degree of family influence on individual family members’ attitudes towards environmental
preservation.
When family involvement and the concern for trans-generational sustainability of control
and the preservation of socio-emotional wealth are high, the welfare of the current and future
family members are linked (Chua et al., 1999; Gomez-Mejia et al., 2007). This involvement and
concern are expected to lead to strong, positive attitudes favoring environmental stewardship
since such stewardship not only favorably influences the reputation of the owning family but also
enhances the family’s legacy. On the other hand, when management or ownership is dispersed
among family and non-family members the impact of their individual or family values on the
firm is mitigated by the competing values and goals of other managers and non-family members
of the dominant coalition in the firm (cf. Cyert & March, 1963). As compared to the dominant
17
Copyright © Society for Business Ethics. This is a non-copyedited version of a paper forthcoming in Business Ethics Quarterly.
It is available for personal scholarly use only. Any other use is subject to the same permissions terms as articles published in BEQ.
- 18. coalition in the family firm, the values and beliefs of lower- or mid-tier managers in a firm are
likely to have a lower influence on the firm’s strategy and resource allocation decisions. It is not
surprising therefore that Cordano and Frieze (2000) did not find a positive relationship between
managerial values and the firm’s environmental performance.
In family owned and managed firms, the dominant coalition is composed of family
members, providing a fertile arena for permeability of values from family into the business and
unification of attitudes (cf. Aldrich & Cliff, 2003; Sharma, 2008). High level of family
involvement in all aspects of business signals strong socio-emotional attachment of the family
with the business (Gomez-Mejia, et al, 2007), as the identity of the family gets intertwined with
that of the firm (Tompkins, 2010). They see themselves as stewards of the firm for future
generations, thereby exhibiting long-term orientation in their decision making and stronger
community citizenship behaviors especially at the local level (Berrone et al., 2010; Craig &
Dibrell, 2006; Dyer Jr. & Whetten, 2006; Post, 1993). As the same family continues its active
involvement in business over long periods of time, perhaps over generations (McConaughy,
2000; Miller & Le-Breton Miller, 2005), the unification of family values with the guiding
policies of the firm becomes deep-rooted and resilient (Sorenson, Goodpaster, Hedberg, & Yu,
2009). For example, during a conversation, a family member of the Benziger Family Wineries in
Sonoma County, California explained how the winery began developing biodynamic organic
farming capabilities:
“Our family has run the Benziger Winery for over two decades with a great deal of
passion and love for the craft of winemaking. For many years, we followed conventional
practices without giving it a second thought. One morning I looked out of the window
and saw our family’s children headed to school through a cloud of herbicide being
sprayed by our low flying crop duster. That is when I had my epiphany. We lived on the
land—the winery was our home—our children would continue to live on this land. We
owed it to the family and to our future generations and to the land that we lived on to
work toward a sustainable ecosystem that would be healthy and productive forever. The
18
Copyright © Society for Business Ethics. This is a non-copyedited version of a paper forthcoming in Business Ethics Quarterly.
It is available for personal scholarly use only. Any other use is subject to the same permissions terms as articles published in BEQ.
- 19. unexpected by-product of a sustainable winery has been a dramatic improvement in our
wines which have won many awards for quality and taste. Perhaps the entire farm
ecosystem shares the joy of the family in the land and this joy is manifest in wine
quality.”
Benziger Family Wineries are now a leader in California in biodynamic farming
methods. Biodynamic is the highest form of organic farming. It goes beyond the elimination of
all chemical inputs. It incorporates the environment in and around the vineyard and works with
nature to apply the knowledge of life forces to bring about balance and healing in the soil. As
stated above, this has led to a series of awards for the quality of their wines. The example
highlights how a family’s desire to protect their socio-emotional wealth could lead to positive
attitudes towards environmental sustainability. Research has revealed the significant impact of
family values on the nature of relationships of the family business with the community and its
key stakeholders, as well as on multiple dimensions of success and performance of family firms
(e.g., Basco & Rodriguez, 2009; Danes, Stafford, Haynes, & Amarapurkar, 2009; Sorenson &
Bierman, 2009). In case of family owned and managed firms the controlling family is not only
likely to have a significant influence on the attitudes of the dominant coalition of the firm, but
attitudes towards environmental preservation are likely to be more unified and positive in
comparison to family managed or family owned firms. Thus we propose that,
P1: The extent of family involvement in the ownership and management of a firm is positively
associated with favorable attitudes of the firm’s dominant coalition toward environmental
preservation.
Family involvement and the dominant coalition’s perception of subjective norms
Even when families, individuals, or dominant coalitions harbor a favorable attitude
toward environmental preservation, their perceptions of whether or not it is appropriate to use the
firm as a vehicle for the pursuit of environmental practices may vary. Such variation is
19
Copyright © Society for Business Ethics. This is a non-copyedited version of a paper forthcoming in Business Ethics Quarterly.
It is available for personal scholarly use only. Any other use is subject to the same permissions terms as articles published in BEQ.
- 20. particularly important with regard to PES since the pursuit of such a strategy requires significant
investment of resources and the development of capabilities. Therefore individuals in the
dominant coalition are likely to look up to the controlling family to calibrate themselves and
establish social norms for the firm. In other words, the controlling family becomes the referent
group for key individuals in the firm (Chrisman, Chua, & Steier, 2003).
In family owned and managed firms such as Benziger Winery, members of the
controlling family are more likely to be dependent on the firm for their financial and socio-
emotional needs, thereby viewing the firm as a long term family investment to be bequeathed to
descendents (Berrone et al., 2010). The family name is associated with the firm as in Benziger
Family winery causing the firm to be seen both by internal and external stakeholders as an
extension of the family itself (Tompkins, 2010). The unification of ownership and control
provides them the authority to make decisions unencumbered by constraints of other dominant or
minority shareholders (Chrisman, Chua & Litz, 2004; Salvato & Moores, 2010). This
personalism motivates them to preserve the firm for the future and develop strong relationships
with other key stakeholders including the community and NGOs i.e., non-governmental
organizations with a mission to protect the natural environment (Carney, 2005; Miller and Le-
Breton Miller, 2005). Research confirms that firms whose key stakeholders are embedded in the
community tend to adopt pro-community strategies regardless of whether or not the economic
benefits of such strategies are well established (e.g., Henriques & Sadorsky, 1999; Kassinis &
Vafeas, 2006). In addition, the dominant coalitions in such firms have the ability to make
particularistic decisions that may not be easy to justify through a rational-calculative lens but are
supported by the non-economic goals of the controlling family (cf. Carney, 2005; Chrisman,
Chua, & Zahra, 2003). Thus, in such firms the dominant coalitions are well positioned to
20
Copyright © Society for Business Ethics. This is a non-copyedited version of a paper forthcoming in Business Ethics Quarterly.
It is available for personal scholarly use only. Any other use is subject to the same permissions terms as articles published in BEQ.
- 21. exercise their own beliefs on environmental preservation through their family firm because their
views become the accepted norms of behavior in the firm.
In firms where the dominant coalition is dominated by family members, the visibility of
the family in the firm is high providing ample opportunities to influence other managers through
words or deeds regarding role of firm in environmental preservation. However, if these
individuals do not have ownership control they are constrained in their decision-making and
cannot readily pursue or support beyond-compliance environmental practices unless they are also
supported by the controlling owners. Thus, their ability to establish norms to undertake activities
within the firm for environmental preservation is constrained.
In instances where a family is involved mainly in the ownership of the firm and not in
visible roles of management, their influence on the dominant coalitions’ perceptions weakens.
Without visibility and frequent contact with family members, non-family members in the
dominant coalition may not be fully aware of the controlling family’s thoughts about
environmental stewardship or whether it is appropriate to use the firm as a vehicle for
environmental preservation. For example, Carly Fiorina at Hewlett & Packard, Jacques Nassar at
Ford Motor Company, and Katsuaki Watanabe at Toyota Motor company, all pursued strategic
directions that later emerged as at odds with the values of the controlling family ownership. In
order to re-align the firm strategy with the family values, these CEOs were ousted and in the case
of Ford, Bill Clay Ford Jr. assumed leadership of the dominant coalition in order to pursue a
vision of environmental stewardship for the firm.
Furthermore, when the ownership is dispersed among several minority shareholders (as
might be in the case of a cousin-consortium), the likelihood of any one viewpoint becoming
dominant is low, leading to the dilution of the strength of the dominant coalition’s intention to
21
Copyright © Society for Business Ethics. This is a non-copyedited version of a paper forthcoming in Business Ethics Quarterly.
It is available for personal scholarly use only. Any other use is subject to the same permissions terms as articles published in BEQ.
- 22. use the firm as a vehicle for environmental preservation. Thus,
P2: The extent of family involvement in the ownership and management of a firm is positively
associated with the firm’s dominant coalitions having subjective norms that encourage the
pursuit of a PES.
Family involvement and the dominant coalition’s perception of behavioral control
Perceived behavioral control refers to the ‘people’s perception of the ease or difficulty of
performing the behavior of interest’ (Ajzen, 1991: 183). For our purposes, this variable refers to
the expectation of dominant coalition members regarding their ability to allocate resources in
order to build organizational capabilities to pursue a PES through their firm.
Family firms with continuity of ownership, long term orientation, and dominating
influence of family in business provide the combination of stability and freedom to pursue their
preferred strategies or particularistic agendas that balance the economic and socio-emotional
goals of the controlling family (Berrone et al., 2010; Carney, 2005). A steadiness of vision over
time is more likely due to the family’s continuing influence on the firm (Tapies & Ward, 2008).
Longevity of the leadership team and long tenures helps imbue these values in the firm making it
easier for the dominant coalition to feel confident about the degree of support they are likely to
get for initiatives aimed (c.f., Miller & Le-Breton Miller, 2005) toward a PES.
A family’s vision of environmental sustainability may emerge with the founder’s vision
of the firm or may be adopted at later stages in the firm’s life cycle. Defining moments such as
simply watching the family’s children walk through a spray of herbicides (as in the Benziger
example above) or major events such as a generational transition may propel the firm towards
the vision of an environmentally sustainable business as was the case of Bill Clay Ford Jr.
discussed earlier (cf. Whetten, 2006). Furthermore, external drivers such as saturated markets
22
Copyright © Society for Business Ethics. This is a non-copyedited version of a paper forthcoming in Business Ethics Quarterly.
It is available for personal scholarly use only. Any other use is subject to the same permissions terms as articles published in BEQ.
- 23. and stagnant technologies may lead a family firm to seek a major strategic re-alignment toward
clean technologies or business models (Hart & Sharma, 2004).
While the reasons for adopting a PES may vary for all firms, whether family or non-
family controlled, the power usually accorded to the family in decision-making in family firms
facilitates a quick change of strategic direction when necessary. This provides clear guidance for
the dominant coalition. For example, when Guardian Service Inds. of New York, contemplated
their move toward green strategies, four key family members from three generations made a
collective decision to ‘take the company in an environmentally friendlier direction’ (Durso,
2007: 60). The decision once made was rapidly implemented necessitating education of 1500 full
time employees, 500 part timers, 100 contractors, and 6,000 clients. “Ninety days after the
Bresslers and Herzfelds made their decision, Guardian was ready to go” green notes Durso
(2007: 61). In such cases, clearly the family control helps in diffusing the chosen direction and
establishing goals and norms to be followed by the firm (Arregle et al., 2007).
But, not all family firms are alike. In cases of dispersed ownership such as in Laird
Norton Tyee LLC that has over 400 family member unit holders making it one of the largest
ownership groups in the world, building cohesion of vision can be time consuming (Steen,
2008). In such cases, making key strategic decisions and diffusing them into the family firm can
take even more time. This would be likely to make the dominant coalition cautious in their
strategic approach. However, strong family ties and governance mechanisms such as family
councils are adopted to help smooth the pathway to shared family decisions on key strategic
directions (Steen, 2008). In cases of family owned but not managed firms, such as Ford Motors
under Jacques Nassar’s leadership or Hewlett Packard under Carly Fiorina’s tenure, at times
conflicting messages of the firm’s vision may be sent by the controlling family and the non-
23
Copyright © Society for Business Ethics. This is a non-copyedited version of a paper forthcoming in Business Ethics Quarterly.
It is available for personal scholarly use only. Any other use is subject to the same permissions terms as articles published in BEQ.
- 24. family CEO, causing confusion of strategic direction for individuals in the dominant coalition.
Changes in the top management teams further alleviate the confusion.
In short, the family owned and managed firms provide the most fertile ground for
sustenance of vision across time and generations as well as a clearer transmission of the vision to
the dominant coalition. This leads to a higher level of perceived behavioral control by the
dominant coalition to pursue a PES. Based on the above, we propose that:
P3. The extent of family involvement in the ownership and management of a firm is positively
associated with high levels of behavioral control by the firm’s dominant coalition to pursue a
PES.
Thus far, we have argued that higher levels of family involvement in the management
and ownership of the business will lead to dominant coalitions with positive attitudes towards
environmental prevention, subjective norms that support using the firm as a vehicle to pursue
environmental preservation, and perceived behavioral control to undertake a PES. We elaborated
that this is because of the significant and long lasting influence of the controlling family on the
dominant coalition, longer leadership tenures in family firms, long-term strategic orientation of
these firms, motivations to accumulate socio-emotional wealth for future generations, maintain a
positive reputation of the family name, and a strong identification of the family with the firm.
According to Ajzen’s (1991) Theory of Planned Behavior, intentions to perform behaviors can
be predicted with high accuracy through these three factors working together. Based on this
theory, we propose that,
P4. Dominant coalitions of family owned and managed firms will have stronger intentions of
using the firm as a vehicle for pursuit of a PES, as compared to dominant coalitions in other
family or non-family firms.
24
Copyright © Society for Business Ethics. This is a non-copyedited version of a paper forthcoming in Business Ethics Quarterly.
It is available for personal scholarly use only. Any other use is subject to the same permissions terms as articles published in BEQ.
- 25. Relationship conflict in the controlling family
Research on conflict within groups, both within and outside the family business context,
suggests the prevalence of three types of conflict: task about the ends to accomplish, process
about how work should be accomplished, and relationship conflict based on perceptions of
animosity and incompatibility (e.g., Eddleston & Kellermanns, 2007; Jehn, 1995, 1997;
Kellermanns & Eddleston, 2004). While task and process conflicts do not carry negative
emotions and may even be positive for achieving the firm’s objectives, relationship conflict
interferes with work efforts, is detrimental to firm performance, and individuals’ satisfaction
with work. Relationship conflict has been found to moderate the outcomes of task and process
conflicts in family firms, negatively influencing performance (e.g., Eddleston & Kellermanns,
2007; Kellermanns & Eddleston, 2004).
Relationships within the family that controls a firm vary from one firm to another and
within one firm from one point in time to another (Hoy & Sharma, 2009). Several structural
factors contribute towards the levels of conflict. These include: the ease of permeability between
the family and business systems, the nature and extent of family involvement in the business, the
number of family members, the current and expected shareholders of the firm, and the prevailing
family norms regarding the nature of intra- and inter-generational relationships, etc. The intensity
of relationships and relationship conflicts within the family group is generally higher both in
positive and negative directions as compared to similar non-family groups. Furthermore, because
family firms are more likely than non-family firms to base their decisions on non-economic
criteria that relate to the creation and preservation of socio-emotional wealth, relational conflicts
(or a lack thereof) are more likely to influence decision-making. In non-family firms decisions
are more likely to be guided by formal, rational, and economic considerations. Therefore, the
25
Copyright © Society for Business Ethics. This is a non-copyedited version of a paper forthcoming in Business Ethics Quarterly.
It is available for personal scholarly use only. Any other use is subject to the same permissions terms as articles published in BEQ.
- 26. extent of relationship conflict is an important variable affecting resource allocation decisions in
family firms. Thus, we focus on relationship conflict within family firms, rather than family
versus non-family firms in this section.
When relationship conflict is minimized in family firms, the kinship ties and shared
history of the family and business can facilitate the development of shared norms and trust in
family, leading to causally ambiguous decision making mechanisms that are critical for
organizational capability development and deployment (cf. Coleman, 1990; Pearson, Carr, &
Shaw, 2008). Such positive family relationships can facilitate the development and deployment
of organizational capabilities that are socially complex and require group interaction. Such
capabilities include higher-order learning (Sharma & Vredenburg, 1998), cross-functional
integration (Russo & Fouts, 1997), and continuous innovation (Hart, 1995; Sharma &
Vredenburg, 1998). Decisions within the family unit are often made via informal interactions as
compared to formal meetings with recorded minutes in non-family firms, contributing to high
causal ambiguity. Mutual interdependence based on shared goals and interests is high in family
firms and leads to collective action (Leana & Van Buren, 1999) in the form of capability
deployment. Family interaction reflects the quantity, quality, and strength of those relationships
(Pearson et al., 2008). Focus on the pursuit of socio-emotional wealth or non-economic goals
such as environmental sustainability can strengthen the shared meaning and interaction for
collective action (Berrone et al., 2010). In other words, positive family relationships can become
a difficult to replicate force and capability in family firms.
On the other hand, dysfunctional family relationships are characterized by disagreements
and internal family conflicts, especially those that have deep historical roots. Such conflicts
could lead to conflicting visions and goals of family members and the spread of ownership and
26
Copyright © Society for Business Ethics. This is a non-copyedited version of a paper forthcoming in Business Ethics Quarterly.
It is available for personal scholarly use only. Any other use is subject to the same permissions terms as articles published in BEQ.
- 27. power between family members can have a paralyzing negative effect on decisions related to the
development and deployment of resources for building organizational capabilities towards the
pursuit of any strategy and especially a perceived risky strategy such as a PES.
Family business scholars have made attempts to capture the intensity and directionality of
these relationships through scales such as family climate, family orientation, family harmony etc.
(e.g., Björnberg & Nicholson, 2007; Danes et al., 2009; Lumpkin, Martin, Vaughn, 2008).
Amongst other factors, the nature of relationship within the controlling family members impacts
the ease or difficulty in decision making at the dominant coalition level. Family firms are living
systems as are their dominant coalitions. Power accorded to members of a family is based on
familial norms and assumptions of the expected modes of behavior between siblings and across
generations (Sharma & Manikutty, 2005). Thus, members of the dominant coalition in family
owned and operated firms, may not necessarily be the same individuals who exercise power in
the family system. However, due to the intertwinement of the two systems of family and
business, powerful family members can significantly influence the decisions of the dominant
coalition using different pathways of control to impede decisions especially where significant
investment of resources are at stake.
Consequently, we argue that the extent of relationship conflict in the controlling family
will moderate the ability of the dominant coalition to convert its intentions to turn a PES into
actions. We therefore propose that,
P5. The level of relationship conflict within the controlling family will moderate the
extent to which the dominant coalition can translate its intentions into actions to allocate
resources to build and deploy organizational capabilities needed for the implementation
of a PES.
27
Copyright © Society for Business Ethics. This is a non-copyedited version of a paper forthcoming in Business Ethics Quarterly.
It is available for personal scholarly use only. Any other use is subject to the same permissions terms as articles published in BEQ.
- 28. Discussion
In this article, our objective was to examine how the introduction of family as a key
stakeholder in business influences the endogenous drivers for the adoption of a proactive
environmental strategy (PES). We distinguish between the beliefs and values of individuals
versus those of the dominant coalition towards environmental preservation. Attitudes towards
environmental preservation in general, and intentions to adopt the firm’s strategy as an
instrument for environmental preservation, are also differentiated. Finally, the intentions of the
dominant coalition to develop a strategy for environmental sustainability are differentiated from
its actual ability to allocate resources to build organizational capabilities to pursue a PES.
Using the theory of planned behavior (Ajzen, 1985, 1991), we argue that three factors
influence the intentions of dominant coalition to pursue PES: (i) beliefs and values of the
controlling family towards the environment, (ii) perceptions of the prevailing social norms
regarding the usage of the firm as a vehicle for environmental preservation, and (iii) the extent of
their perceived behavior control. As compared to other family and non-family firms, family
owned and operated firms will be more likely to have dominant coalitions with positive
intentions to pursue PES and use the family firm as a vehicle for environmental preservation.
The level of relationship conflict in the family is theorized to moderate the ability of dominant
coalition to translate these intentions into actions by investing in, and allocating resources to
build organizational capabilities to pursue an enduring PES. Lower levels of relationship conflict
will enhance their ability to build these organizational capabilities.
This is because of the long-term orientation of family firms, their ability to pursue a
combination of financial and socio-emotional objectives through the firm, power to make
particularistic decisions that do not necessarily follow a strictly economic rationale and strong
28
Copyright © Society for Business Ethics. This is a non-copyedited version of a paper forthcoming in Business Ethics Quarterly.
It is available for personal scholarly use only. Any other use is subject to the same permissions terms as articles published in BEQ.
- 29. influence of family on the dominant coalition of the firm. Such influence of individual or familial
values and beliefs on organizational level attitudes is much less likely in non-family firms due to
competing managerial perspectives, shorter managerial tenures and the rotation of dominant
coalition members between units/divisions/jobs, and the lower co-mingling of individual and
organizational identities.
The proposed theoretical framework is not intended to be comprehensive in explaining
the organizational factors that influence the allocation of resources for the development and
deployment of organizational capabilities by family firms for generating a PES. Rather, it
highlights the unique characteristics of family owned and managed firms that will make them
more likely to develop and deploy capabilities for such a strategy. Ethical frameworks certainly
help individual managers and family members in family firms develop moral rationale for
preserving the natural environment for its own sake. However, managers and family members
operate in highly competitive, complex, and fast-paced business environments where they must
develop equally strong economic and instrumental rationale for undertaking social and
environmental practices. The ONE literature usefully complements the business ethics literature
in helping managers make decisions that will move their firms toward a more sustainable
strategy.
Implications for research: To test this framework, it is obvious that any empirical
research will need to compare family owned and managed firms with other family and non-
family firms. These populations would need to be fairly similar in terms of geographic location,
size, and distribution of revenues. As the focus of our theorizing is on endogenous factors
influencing the adoption and successful implementation of PES, it would be prudent to start with
single industry studies as they would be subject to similar environmental, legal, political
29
Copyright © Society for Business Ethics. This is a non-copyedited version of a paper forthcoming in Business Ethics Quarterly.
It is available for personal scholarly use only. Any other use is subject to the same permissions terms as articles published in BEQ.
- 30. considerations. Cross industry comparisons can follow once an in-depth understanding of
internal drivers is specified using controlled single industry studies.
The winery industry offers a unique context for testing the theoretical model developed in
this article. Previous research on the Canadian winery industry has revealed three different type
of wineries based on extent of family involvement: corporate, traditional family, and life-style
family wineries (Reay & Hinings, 2007). These different types of wineries were found to co-
exist peacefully within the same location although each adopted a different logic and strategic
approach (Reay & Hinings, 2007). Research on the US winery industry suggests that this
industry is at early stages of transformation in its implementation of environmental strategies,
although the pressure from external agencies to curb usage of pesticides and stop encroachment
on habitats of endangered species continues to escalate (Marshall, Cordano, Silverman, 2005;
Sogg, 2000). At this stage of development, while some wineries such as Benziger Family winery
mentioned earlier are at the forefront of PES, there is a wide variation of practices and strategies
amongst firms in the industry.
The focus of our theorizing has been on the attitudes, perceptions, and beliefs of
dominant coalitions of the firm, and how it is affected by family involvement in business and
relationships in the controlling family. These variables would necessitate data collection from
multiple individuals who form the dominant coalition in family and non-family firms. In the first
instance, this would require the identification of these members. The measures would involve
multiple respondents and a heuristic for aggregation of responses. Given the penchant for privacy
in family firms, it is likely that multiple responses from dominant coalitions of family can be
more effectively obtained via personal interviews rather than through mailed or electronic
questionnaires. Thus, comparative case studies would be the first step towards empirically testing
30
Copyright © Society for Business Ethics. This is a non-copyedited version of a paper forthcoming in Business Ethics Quarterly.
It is available for personal scholarly use only. Any other use is subject to the same permissions terms as articles published in BEQ.
- 31. this framework. In addition to providing the preliminary test of the theoretical framework, such
preliminary research could also be used to develop or refine measures for constructs in the study.
For the main dependent variable of the study, proactive environmental strategy, the ONE
literature has developed a wide variety of measures and instruments. These range from measures
with high reliability but with a very narrow representation of environmental sustainability (e.g.,
pollution data in the form of toxic release inventories (King & Lennox, 2000) or pollution
prevention registries, to measures with lower reliability that capture a wide range of
environmental practices of firms (e.g., Sharma & Vredenburg, 1998). Thus, there are major
opportunities to develop robust measures of corporate environmental strategy that captures a
wide range of environmental practices and are reliable and replicable at the same time.
Measures for values regarding environmental preservation, norms regarding role of
business in environmental sustainability, and perceptions of their behavioral control on actions
related to pursuit of PES, the three key variables from theory of planned behavior used in this
study, have been developed in non-family business contexts and in family business to understand
succession issues (Cordano & Freize, 2000; Sharma et al., 2003). Although these can provide an
important starting point, these measures will need to be further developed for testing our model.
The aggregated vision of the top management team of non-family firms, as a comparison point,
would use the same measures.
The family business literature can provide guidance for measures to understand the
degree or extent of family involvement in business (e.g., Chrisman, Chua, & Litz, 2004; Holt,
Rutherford, & Kuratko, 2010; Klein, Astrachan, & Smyrnios, 2005). Relationship conflict has
well developed measures that have been successfully used both in family firm and non-family
firm contexts (e.g., Jehn, 1995, 1997; Kellermanns & Eddleston, 2007). Preliminary comparative
31
Copyright © Society for Business Ethics. This is a non-copyedited version of a paper forthcoming in Business Ethics Quarterly.
It is available for personal scholarly use only. Any other use is subject to the same permissions terms as articles published in BEQ.
- 32. case study research should prove valuable in developing robust scales for the variables in the
model.
Family firms present a unique set of internal dynamics for strategic decision-making that
motivate this research. Therefore, it may be worthwhile to explore if the theoretical framework
presented here can be generalized to major strategic decisions by family firms other than the
development of environmental strategies. As the family business literature argues, family
controlled businesses represent a dominant segment of the global economy. Given the
complexity and magnitude of environmental issues, research on how to motivate family firms to
embrace sustainability strategy and to move toward a sustainable world becomes imperative.
32
Copyright © Society for Business Ethics. This is a non-copyedited version of a paper forthcoming in Business Ethics Quarterly.
It is available for personal scholarly use only. Any other use is subject to the same permissions terms as articles published in BEQ.
- 33. References
Ajzen, I. 1985. From intentions to actions: A theory of planned behavior. In J.Kuhl & Beckmann
(Eds.), Action Control: From cognition to behavior. 11-39. New York: Springer-Verlag.
Ajzen, I. 1991. The theory of planned behavior. Organizational Behavior and Human Decision
Processes, 50:179-211.
Aldrich, H.E. & Cliff, J.E. 2003. The pervasive effects of family on entrepreneurship: Toward a
family embeddedness perspective. Journal of Business Venturing. 18: 573-596.
Amit, R. & Schoemaker, P.J.H. 1993. Strategic assets and organizational rent. Strategic
Management Journal, 14: 33-46.
Aragón-Correa J.A. 1998. Strategic proactivity and firm approach to the natural environment.
Academy of Management Journal, 41: 556-567.
Aragón-Correa, A. & Sharma, S. 2003 A contingent natural-resource based view of proactive
environmental strategy. Academy of Management Review, 28: 71-88.
Arregle, J., Hitt, M.A., Sirmon, D.G., & Very P. 2007. The development of organizational social
capital: Attributes of family firms. Journal of Management Studies, 44: 73-95.
Ashford, N. A. 1993. Understanding technological responses of industrial firms to environmental
problems: Implications for government policy. In J. Schot & K. Fischer (Eds.),
Environmental strategies for industry. International perspectives on research needs and
policy implications: 277-310. Washington, DC: Island Press.
Bansal, P. 2003. From issue to actions: The importance of individual concerns and organizational
values in responding to natural environmental issues. Organization Science, 14: 510-527.
Bansal, P. and Roth, K. 2000. Why companies go green: A model of ecological responsiveness.
Academy of Management Journal, 43: 717-736.
Basco, R. & Rodriguez, M.J.P. 2009. Studying the family enterprise holistically: Evidence for
integrated family and business systems. Family Business Review, 22: 82-95.
Berrone, P., Cruz, C., Gomez-Mejia, L.R., & Kintana, M.L. 2010. Socioemotional Wealth and
Corporate Responses to Institutional Pressures: Do Family-Controlled Firms Pollute
Less? Administrative Science Quarterly, 55: 82-113.
Björnberg, A. & Nicholson, N. 2007. The family climate scales – Development of a new
measure for use in family business research. Family Business Review, 20: 229-246.
Buysse K. & Verbeke A. 2003. Proactive environmental strategies: A stakeholder management
perspective. Strategic Management Journal, 24: 453-470.
Carney, M. 2005. Corporate governance and competitive advantage in family controlled firms.
Entrepreneurship Theory and Practice, 29: 249-265.
Cebon, P. B. 1993. The myth of best practices: The context dependence of two high-performing
waste reduction programs. In J. Schot & K. Fischer (Eds.), Environmental strategies for
industry: International perspectives on research needs and policy implications: 167-197.
Washington, DC: Island Press.
Chrisman, J.J., Chua, J.H. & Litz, R. 2004. Comparing the agency costs of family and non-
family firms: Conceptual issues and exploratory evidence. Entrepreneurship Theory &
Practice, 28: 335-354.
Chrisman, J.J., Chua, J.H., & Sharma, P. 2005. Trends and directions in the development of a
strategic management theory of the family firm. Entrepreneurship Theory & Practice.
29: 555-576.
33
Copyright © Society for Business Ethics. This is a non-copyedited version of a paper forthcoming in Business Ethics Quarterly.
It is available for personal scholarly use only. Any other use is subject to the same permissions terms as articles published in BEQ.
- 34. Chrisman, J.J., Chua, J.H., & Steier, L.P. 2003. An introduction to theories of family business.
Journal of Business Venturing, 18: 441-448.
Chrisman, J.J., Chua, J.H., & Zahra, S.A. 2003. Creating wealth in family firms through
managing resources: Comments and extensions. Entrepreneurship Theory & Practice,
27: 359-372.
Christmann, P. 2000. Effects of “best practices” of environmental management on cost
advantage: The role of complementary assets. Academy of Management Journal, 43: 663-
680.
Chua, J.H., Chrisman, J.J. & Sharma, P. 1999. Defining family business by behavior.
Entrepreneurship Theory and Practice, 231: 19-39.
Coleman, J.S. 1990. Foundations of Social Theory. Cambridge, MA: Harvard University Press.
Cordano, M., & Frieze, I.H. 2000. Pollution reduction preferences of U.S. environmental managers:
Applying Ajzen's theory of planned behavior. Academy of Management Journal, 43: 627-
641.
Craig, J. & Dibrell, C. 2006. The natural environment, innovation, and firm performance: A
comparative study. Family Business Review, 19: 275-288.
Cyert, R.M. & March, J.G. 1963. A behavioral theory of the firm (2nd edition). Malden, MA:
Blackwell.
Danes, S.M., Stafford, K., Haynes, G., & Amarapurkar, S.S. 2009. Family capital of family firms:
Bridging human, social, and financial capital. Family Business Review, 22: 199-215.
Durso, T.W. 2007. Clean and green. Family Business, Summer: 60-62.
Dyer Jr., W.G. 2003. The family: The missing variable in organizational research.
Entrepreneurship Theory and Practice, 27(4): 401-416.
Dyer Jr., W.G. & Dyer, W.J. 2009. Putting the family into family business research. Family Business
Review, 22: 216-219.
Dyer Jr., W.G. & Whetten, D.A. 2006. Family firms and social responsibility: Preliminary
evidence from the S&P 500. Entrepreneurship Theory and Practice November 30(6):
785-802.
Eddleston, K. & Kellermanns, F. W. 2007. Destructive and productive family relationships: A
stewardship theory perspective. Journal of Business Venturing. 22(4): 545-565.
Egri, C.P., & Herman, S. 2000. Leadership in the North American environmental sector: Values,
leadership styles, and contexts of environmental leaders and their organizations. Academy of
Management Journal, 43: 571-604.
Gavetti, G. 2005. Cognition and hierarchy: Rethinking the microfoundations of capabilities’s
development. Organization Science, 16(6): 599-617.
Gersick, K.E., Davis, J.A., Hampton, M.M. & Lansberg, I. 1997. Generation to generation: Life
cycles of the family business. Boston, MA: Harvard Business School Press.
Giddens, A. 1984. The constitution of society: Outline of the theory of structuration. Berkeley,
CA: University of California Press.
Gladwin, T.N., Kennelly, J.J., & Krause, T.S. 1995. Shifting paradigms for sustainable
development: Implications for management theory and research. Academy of
Management Review, 20: 874-907.
Gomez-Mejia, L.R., Haynes, K.T., Nunez-Nickel, M., Jacobson, K.J.L. & Moyano-Fuentes, J.
2007. Socioemotional Wealth and Business Risks in Family-controlled Firms: Evidence
from Spanish Olive Oil Mills. Administrative Science Quarterly, 52: 106-137.
34
Copyright © Society for Business Ethics. This is a non-copyedited version of a paper forthcoming in Business Ethics Quarterly.
It is available for personal scholarly use only. Any other use is subject to the same permissions terms as articles published in BEQ.
- 35. Griffin, J.J. & Mahon, J.F. 1997. The corporate social performance and corporate financial
performance debate: Twenty-five years of incomparable research. Business and Society,
36: 5-31.
Grote, J. 2003. Conflicting generations: A new theory of family business rivalry. Family
Business Review, 16: 113-124.
Habbershon, T.G. & Williams, M.L. 1999. A resource-based framework for assessing the
strategic advantages of family firms, Family Business Review 12 (1), pp. 1–22
Hart, S.L. 1995. A natural-resource-based view of the firm. Academy of Management Review, 20:
874-907.
Hart, S.L., & Ahuja, G. 1996. Does it pay be green? An empirical examination of the relationship
between emission reduction and firm performance. Business Strategy and the Environment,
5: 30-37.
Hart, S.L. & Sharma, S. 2004. Engaging fringe stakeholders for competitive imagination.
Academy of Management Executive, 18:7-18.
Henriques, I. & Sadorsky, P. 1999. The relationship between environmental commitment and
managerial perceptions of stakeholder importance. Academy of Management Journal, 42:
87-99.
Hoffman, A.J. 1999. Institutional evolution and change: Environmentalism and the U.S. chemical
industry. Academy of Management Journal, 42: 351-371.
Holt, D.T., Rutherford, M.W., & Kuratko, D.F. 2010. Advancing the field of family business
research: Further testing the measurement properties of the F-PEC. Family Business Review,
23: 76-88.
Hoy, F. & Sharma, P. 2009. Entrepreneurial family firms. Upper Saddle River, NJ: Prentice Hall.
Jehn, K.A. 1995. A multimethod examination of the benefits and detriments of intragroup conflict.
Administrative Science Quarterly, 40: 256-282.
Jehn, K.A. 1997. A quantitative analysis of conflict types and dimensions in organizational groups.
Administrative Science Quarterly, 42(3): 530-558.
Jennings, P.D. & Zandbergen, P.A. 1995. Ecologically sustainable organizations: An
institutional approach. Academy of Management Review, 20: 1015-1052.
Johns, G. & Saks, A.M. 2008. Organizational Behaviours: Understanding and managing life at
work. Toronto: Pearson Prentice Hall.
Jones, E.E. & Gerard, H.B. 1967. Foundations of social psychology. New York: Wiley.
Judge, T.A. & Bretz, R.D., Jr. 1992. Effects of work values on job choice decisions. Journal of
Applied Psychology, 77: 261-271.
Judge, W.Q., & Douglas, T.J. 1998. Performance implications of incorporating natural
environmental issues into the strategic planning process: An empirical assessment. Journal of
Management Studies, 35: 241-262.
Kanter, R.M. 2009. Supercorp: How vanguard companies create innovation, profits, growth,
and social good. Crown Publishing Group: NY.
Kassinis, G. & Vafeas, N. 2006. Stakeholder pressures and environmental performance. Academy of
Management Journal, 49: 145-159.
Kellermanns, F. W. & Eddleston, K. 2004. Feuding families: When conflict does a family firm good.
Entrepreneurship Theory and Practice, 28: 209–228.
35
Copyright © Society for Business Ethics. This is a non-copyedited version of a paper forthcoming in Business Ethics Quarterly.
It is available for personal scholarly use only. Any other use is subject to the same permissions terms as articles published in BEQ.
- 36. Klassen, R.D., & McLaughlin, C.P. 1996. The impact of environmental management on firm
performance. Management Science, 42: 1199-1214.
King, A. & Lennox, M. 2000. Industry self-regulation without sanctions: The chemical industry's
Responsible Care Program. Academy of Management Journal, 43: 698-716.
Klein, S.A., Astrachan, J.H., & Smyrnios, K. 2005. The F-PEC scale of family influence:
Construction, validation, and further implications for theory. Entrepreneurship Theory &
Practice, 29: 321-339.
La Porta, R., Lopez-de-Silanes, F., & Shleifer, A. 1999. Corporate ownership around the world.
Journal of Finance, 54: 471-517.
Leana, C.R. & Van Buren, H.J. 1999. Organizational social capital and employment practices.
Academy of Management Review, 24:538-555.
Le-Breton Miller, I. & Miller, D. 2008. To grow or to harvest? Governance, strategy, and
performance in family and lone founder firms. Journal of Management and Strategy, 1:
41-56.
Litz, R.A. 1997. The Family Firm's Exclusion From Business School Research: Explaining the
Void; Addressing the Opportunity. Entrepreneurship Theory & Practice, 21: 55-71.
Lumpkin, G.T., Martin, W., & Vaughn, M. 2008. Family orientation: Individual-level influences
on family firm outcomes. Family Business Review, 21: 127-138.
Marcus, A.A., & Geffen, D. 1998. The dialectics of competency acquisition: Pollution prevention in
electric generation. Strategic Management Journal, 19: 1145-1168.
Margolis, J.D. & Walsh, J.P. 2003. Misery loves companies: Rethinking social initiatives by
business. Administrative Science Quarterly, 48: 268-305.
Marshall, R.S., Cordano, M. & Silverman, M. 2005. Exploring individual and institutional
drivers of proactive environmentalisms in the US wine industry. Business Strategy and
the Environment, 14: 92-109
McEvily, B. & Marcus, A. 2005. Embedded ties and the acquisition of competitive capabilities.
Strategic Management Journal, 26:1033-1055.
McConaughy, D.L. 2000. Family CEOs vs. Nonfamily CEOs in the family controlled firm: An
examination of the level and sensitivity of pay to performance. Family Business Review,
3: 121-131.
Miller, D. & Le Breton-Miller, I. 2005. Managing for the long-run: Lessons in competitive
advantage from great family businesses. Boston, MA: Harvard Business School Press.
Orts, E.W., & Strudler, A. 2002. The ethical and environmental limits of stakeholder theory.
Business Ethics Quarterly, 12: 215-233.
Pearson, A.W., Carr, J.C., and Shaw, J.C. 2008. Toward a theory of familiness: A social capital
perspective. Entrepreneurship Theory and Practice, 32: 949-969.
Post, J.E. 1993. The greening of Boston Park Plaza Hotel. Family Business Review, 6: 131-148.
Reay, T. & Hinings, C.B. 2007. Multiple logics and strategic approach: Family firms in the
Canadian wine industry. Paper presented at the Family Enterprise Research Conferenc,
Monterrey, Mexico.
Rokeach, M. 1973. The nature of human values. New York: Free Press.
Roome, N. 1992. Developing environmental management strategies. Business Strategy and the
Environment, 1: 11-24.
Russo, M.V., & Fouts, P.A. 1997. A resource-based perspective on corporate environmental
performance and profitability. Academy of Management Journal, 40: 534-559.
36
Copyright © Society for Business Ethics. This is a non-copyedited version of a paper forthcoming in Business Ethics Quarterly.
It is available for personal scholarly use only. Any other use is subject to the same permissions terms as articles published in BEQ.
- 37. Salvato, C. & Moores, K. 2010. Research on accounting in family firms: Past accomplishments
and future challenges. Family Business Review,23: 193-215
Sciascia, S. & Mazzola, P. 2008. Family involvement in ownership and management: Exploring
the nonlinear effects on performance. Family Business Review, 21: 331-345.
Sharma, P. 2004. An overview of the field of family business studies: Current status and directions
for future. Family Business Review, 17: 1-36.
Sharma, P. 2008. Familiness: Capital stocks and flows between family and business.
Entrepreneurship Theory & Practice, 32: 971-977.
Sharma, P., Chrisman, J.J., & Chua, J.H. 2003. Succession planning as planned behavior: Some
empirical results. Family Business Review, 16: 1-15.
Sharma, P. & Manikutty, S. 2005. Strategic Divestments in Family Firms: Role of Family
Structure and Community Culture. Entrepreneurship, Theory and Practice, 29: 293-311.
Sharma, P. & Nordqvist, M. 2008. A classification scheme for family firms: From family values to
effective governance to firm performance. In Tapies, J. & Ward, J.L (Ed.) Family values and
value creation: How do family-owned businesses foster enduring values: 71-101. Palgrave
Macmillan Publishers.
Sharma, S. 2000. Managerial interpretations and organizational context as predictors of corporate
choice of environmental strategy. Academy of Management Journal, 43: 681-697.
Sharma, S., Aragón-Correa, J.A., & Rueda, A. 2007. The Contingent Influence Of Organizational
Capabilities On Proactive Environmental Strategy In The Service Sector: An Analysis Of
North American And European Ski Resorts. Canadian Journal of Administrative Sciences,
24: 268-283.
Sharma, S. & Henriques, I. 2005. Stakeholder influences on sustainability practices in the
Canadian forest products industry. Strategic Management Journal, 26: 159-180.
Sharma, S. & Vredenburg, H. 1998. Proactive corporate environmental strategy and the
development of competitively valuable organizational capabilities. Strategic Management
Journal, 19: 729-753.
Shrivastava, P. 1995. The role of corporations in achieving ecological sustainability. Academy of
Management Review, 20: 936-960.
Shrivastava, P. 2000. Ecocentering strategic management. In J. Reichart and P.H. Werhane,
Editors, Ruffin Series: Environmental Challenges to Business. 2: 23-42
Sirmon, D.G. & Hitt, M.A. 2003. Managing resources: Linking unique resources, management
and wealth creation in family firms. Entrepreneurship Theory & Practice, 27: 339-358.
Sogg, D. 2000. Vineyards vs. Environment in California. The Wine Spectator.
http://www.winespectator.com/wine/Daily/News/[14August 2003]
Sorenson, R.L. 1999. Conflict management strategies used in successful family businesses.
Family Business Review,12: 325-339.
Sorenson, R.L. & Bierman, L. 2009. Family capital, family business, and free enterprise. Family
Business Review, 22: 193-195.
Sorenson, R.L., Goodpaster, K.E., Hedberg, P.R., & Yu, A. 2009. The family point of view,
family social capital, and firm performance. Family Business Review, 22: 239-253.
Spence, L.J., Jeurissen, R., & Rutherfoord, R. 2000. Small business and the environment in the
UK and the Netherlands: Toward stakeholder cooperation. Business Ethics Quarterly,
10(4): 945-965.
37
Copyright © Society for Business Ethics. This is a non-copyedited version of a paper forthcoming in Business Ethics Quarterly.
It is available for personal scholarly use only. Any other use is subject to the same permissions terms as articles published in BEQ.
- 38. Stafford, K., Duncan, K.A., Dane, S.M., & Winter, M. 1999. A research model of sustainable
family business. Family Business Review, 12: 197-208.
Starik, M., & Rands, G.P. 1995. Weaving an integrated web: Multilevel and multisystem
perspectives of ecologically sustainable organizations. Academy of Management Review,
20: 908-935.
Steen, M. 2008. Continuity through change. Family Business, Summer: 48-52.
Steier, L. 2007. New venture creation and organization: A familial sub-narrative. Journal of
Business Research, 60: 1099-1107.
Tapies, J. & Ward, J.L. 2008. Family Values and Value Creation: The fostering of enduring
values within family-owned businesses. Palgrave MacMillan: New York.
Tokarczyk, J., Hansen, E., Green, M. & Down, J. 2007. A resource based view and market
orientation theory examination of the role of “familiness” in family business success.
Family Business Review, 20: 17-31.
Tompkins, R. 2010. Organizational identity in a family-owned business: The hybrid identity of a
family enterprise. Unpublished dissertation, The George Washington University,
Virginia, USA.
Ward, J.J. 1987. Keeping the family business healthy. San Francisco: Jossey-Bass.
Whetten, D.A. 2006. Albert and Whetten revisited: Strengthening the concept of organizational
identity. Journal of Management Inquiry, 15: 219-234.
38
Copyright © Society for Business Ethics. This is a non-copyedited version of a paper forthcoming in Business Ethics Quarterly.
It is available for personal scholarly use only. Any other use is subject to the same permissions terms as articles published in BEQ.