Revisiting the Effect of Family Involvement on Corporate Social Responsibility: A Behavioral Agency Perspective

40 Pages Posted: 25 Jan 2017

See all articles by Victor Cui

Victor Cui

University of Manitoba - Asper School of Business; Sauder School of Business, University of British Columbia

Shujun Ding

University of Ottawa - Telfer School of Management

Mingzhi Liu

University of Manitoba - Asper School of Business

Zhenyu Wu

University of Manitoba

Date Written: August 1, 2016

Abstract

This paper sheds light on the incongruent findings concerning the relationship between family involvement and firms’ corporate social responsibility (CSR). While prior studies have mainly taken the perspective of families’ socio-emotional wealth preservation, we approach this relationship from the perspective of behavioral agency theory, highlighting the important role played by CEOs’ family memberships. Specifically, we posit that family firms are more likely to invest in CSR when their CEOs are members of the controlling families. Furthermore, we examine how family firms can employ long-term incentives to encourage non-family CEOs to act in the interests of the controlling families to preserve SEW and thus enhancing family firms’ CSR performance. We tested our hypotheses using hand-collected data of family firms included in the S&P 500 index, in the period of 2003 to 2010. The empirical findings support our hypotheses that (a) family firms with family members as the CEOs have better CSR performance and (b) family firms tend to provide a high level of long-term incentives to non-family than family CEOs. In addition, long-term incentives strongly motivate CEOs to improve firms’ CSR performance, regardless of their family memberships.

Keywords: Corporate Social Responsibility, Family Involvement, Behavioral Agency Theory, CEOs’ Family Membership, Long-term Incentives, Socioemotional Wealth

Suggested Citation

Cui, Victor and Ding, Shujun and Liu, Mingzhi and Wu, Zhenyu, Revisiting the Effect of Family Involvement on Corporate Social Responsibility: A Behavioral Agency Perspective (August 1, 2016). Journal of Business Ethics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2903814

Victor Cui

University of Manitoba - Asper School of Business ( email )

181 Freedman Crescent
Winnipeg, Manitoba R3T 5V4
Canada

Sauder School of Business, University of British Columbia ( email )

2053 Main Mall
Vancouver, British Columbia BC V6T 1Z2
Canada

Shujun Ding

University of Ottawa - Telfer School of Management ( email )

136 Jean-Jacques Lussier Street
Ottawa, Ontario K1N 6N5
Canada

Mingzhi Liu (Contact Author)

University of Manitoba - Asper School of Business ( email )

460-181 Freedman Crescent
Winnipeg, Manitoba R3T 5V5
Canada
204-474-6847 (Phone)

HOME PAGE: http://umanitoba.ca/faculties/management/faculty_staff/academic_professors/mingzhi-liu.html

Zhenyu Wu

University of Manitoba ( email )

181 Freedman Crescent
Winnipeg, Manitoba R3T 5V4
Canada

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