Historically, management theory has ignored the constraints imposed by the biophysical (natural) environment. Building upon resource-based theory, this article attempts to fill this void by proposing a natural-resource-based view of the firm—a theory of competitive advantage based upon the firm's relationship to the natural environment. It is composed of three interconnected strategies: pollution prevention, product stewardship, and sustainable development. Propositions are advanced for each of these strategies regarding key resource requirements and their contributions to sustained competitive advantage.

A natural resource-based view of the firm

Forecasting Bankruptcy More Accurately: A Simple Hazard Model

The concept of sustainable and responsible (SR) investments expresses that every investment should be based on the SR investor’s code of ethics. To a large extent the allocation of SR investments to more sustainable companies and ethical practices is based on the environmental, social, and corporate governance (ESG) scores provided by rating agencies. However, a thorough investigation of ESG scores is a neglected topic in the literature. This paper uses Thomson Reuters ASSET4 ESG ratings to analyze the influence of firm size, a company’s available resources for providing ESG data, and the availability of a company’s ESG data on the company’s sustainability performance. We find a significant positive correlation between the stated variables, which can be explained by organizational legitimacy. The results raise the question of whether the way the ESG score measures corporate sustainability gives an advantage to larger firms with more resources while not providing SR investors with the information needed to make decisions based on their beliefs. Due to our results, SR investors and scholars should reopen the discussion about: what sustainability rating agencies measure with ESG scores, what exactly needs to be measured, and if the sustainable finance community can reach their self-imposed objectives with this measurement.

The Influence of Firm Size on the ESG Score: Corporate Sustainability Ratings Under Review

There has been much debate concerning the performance of family firms and the drivers of their performance. Some scholars have argued that family management is to blame when family firms go wrong; others claim that family management removes costly agency problems and encourages stewardship. Our thesis is that these disagreements can only be resolved by distinguishing among different types of family firms. We argue that family CEOs will outperform in smaller firms with more concentrated ownership and underperform in larger firms with more dispersed ownership; they will do neither where firms are smaller and ownership is more dispersed or firms are larger and ownership is more concentrated. Copyright © 2012 John Wiley & Sons, Ltd.

Is family leadership always beneficial

We investigate the scientific productivity of Italian academic inventors, namely academic researchers designated as inventors on patent applications to the European Patent Office, 1978–1999. We use a novel longitudinal data set comprising 299 academic inventors, and we match them with an equal number of non-patenting researchers. We enquire whether a trade-off between publishing and patenting, or a trade-off between basic and applied research exists, on the basis of the number and quality of publications. We find no trace of such a trade-off, and find instead a strong and positive relationship between patenting and publishing, even in basic science. Our results suggest, however, that it is not patenting per se that boosts scientific productivity, but the advantage derived from solid links with industry, as the strongest correlation between publishing and patenting activity is found when patents are owned by business partners, rather than individual scientists or their universities.

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The scientific productivity of academic inventors: new evidence from italian data

Building on Institutional theory and Signaling theory, integrated with the socioemotional wealth (SEW) approach, we studied the effect of earnings management (EM) practices on a firm’s Corporate Social Responsibility (CSR) disclosure behavior. In so doing, we analyzed a sample of 226 non-financial, family and non-family listed firms for the period, 2006–2015. Our results suggest that family firms, in instances of downward earnings management, are more prone to diverting attention from these practices by means of CSR disclosure, compared to non-family firms, although the level of family ownership exerts a moderating effect. Moreover, we found that a firm’s visibility, in terms of size, significantly enhances this behavior and that the effect is higher for family firms.

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Earnings Management and CSR Disclosure. Family vs. Non-Family Firms

Purpose – This paper aims to examine the determinants of capital structure of unlisted firms and how family governance-related factors impact on them. Design/methodology/approach – The authors analyze the relation between a set of capital structure determinants and leverage in a unique dataset of 3,006 family and non-family Italian medium-large firms (26,210 obs.), and a control sample of 2,730 small firms (14,780 obs.), using cross-section and panel procedures during 2001-2010. Findings – Capital structure choices of medium-large family firms are linked to balance-sheet variables not used in previous studies, i.e. net working capital and capital turnover, and are significantly affected by the need to maintain control and influence, a relevant dimension of family socioemotional wealth. Family firms are more levered than non-family firms, but the difference is economically and statistically significant only for medium-large companies. The presence of the family in active management increases leverage, as t...

The capital structure choices of family firms

We analyze the largely unexplored differences in sustainability reporting within family businesses using a sample of 230 non-financial Italian listed firms for the period 2004–2013. Drawing on legitimacy theory and stakeholder theory, integrated with the socio-emotional wealth (SEW) approach, we study how family control, influence and identification shape a firm’s attitude towards disclosing its social and environmental behavior. Our results suggest that family firms are more sensitive to media exposure than their non-family counterparts and that family control enhances sustainability disclosure when it is associated to a family’s direct influence on the business, by the founder’s presence on the board or by having a family CEO. In cases of indirect influence, without family involvement on the board, the level of family ownership is negatively related to sustainability reporting. On the other hand, a formal identification of the family with the firm by business name does not significantly affect social disclosure.

Sustainability Reporting in Family Firms: A Panel Data Analysis

Purpose




This paper aims to study firms’ attitudes toward using sustainability reporting for facilitating raising external capital and the effect of the ultimate controlling owner on disclosure.




Design/methodology/approach




A disclosure index is constructed on the basis of sustainability reports, for a sample of 230 Italian listed firms. Empirical analysis is based on panel data models.




Findings




Firms are more prone to disclose when they are planning to issue equity/bonds. Family control does not affect disclosure in the case of bond issues, but it has a moderating effect in the case of equity issuance. A family CEO, increasing the family’s sense of identification with the business, improves disclosure.




Research limitations/implications




Family ownership is the most viable measure to assess its socioemotional wealth (SEW). This assesses only the dimension related to family control and influence but it does not take into account other aspects of SEW. This study focuses on the relationship between disclosure and financing choices; it does not analyze the relationship between disclosure and success of equity/bond issues.




Practical implications




Family firms should improve their sustainability reporting, especially for firms operating in environmentally sensitive industries. Sustainability reports could play an effective role as a control mechanism in a firm’s behavior toward the environment, society, its employees and consumers.




Originality/value




The paper contributes to the studies on sustainability, showing that the nature of ultimate controlling owners and firms’ financing decisions affect disclosure. Moreover, it contributes to family firms’ literature, shedding light on the effect of the family control and sense of identification with the firm on disclosure.

The effect of equity and bond issues on sustainability disclosure. Family vs non-family Italian firms

CSR reporting is a relevant part of a firm’s dialogue with stakeholders, therefore it is of interest to study whether this form of communication is an effective tool for gaining customers’ support. This paper addresses this issue by comparing the effect of CSR disclosure on family and non-family firms’ revenues. In doing so, we analyze a sample of Italian non-financial listed firms and we control for the effect of visibility to stakeholders, governance characteristics, risk, and several accounting variables. We find that CSR reporting has a significant effect on revenues when a company is characterized by consumer proximity, in terms of product or services visibility for consumers, but that the effect is positive for family firms and negative for non-family companies.

Anna Maria Moisello

Papers

Earnings Management and CSR Disclosure. Family vs. Non-Family Firms

The capital structure choices of family firms

Sustainability Reporting in Family Firms: A Panel Data Analysis

The effect of equity and bond issues on sustainability disclosure. Family vs non-family Italian firms

Do Customers Value CSR Disclosure? Evidence from Italian Family and Non-Family Firms