Proactive Environmental Strategies Adoption by Family Firms in Emerging Economies: The Role of Informality and Environmental Policy Stringency

Abstract

Family firms represent a large share of the private sector in emerging economies. A key feature of family firms is that their behavior is driven by factors other than financial, making them more prone to adopt proactive environmental strategies (PES). Our objective is to assess the relationship between the firms' degree of family ownership and PES adoption through the lens of Socio-Emotional Wealth (SEW), the emotional and non-economic value family members consider when making decisions. We also investigate the moderating effect of two institutional factors: the perceived level of informal firms' competition and the perceived degree of environmental policy stringency in adopting PES. Our results suggest that family firms are more likely to adopt PES. However, both moderating factors tend to weaken this effect. Our results suggest that for family managers aiming to implement PES, they should consider institutional external factors rather than focus solely on internal drivers. Policymakers, meanwhile, should recognize that environmental stringency alone is insufficient for family firms to achieve sustainable production. As an alternative, these regulations may be accompanied by enforcement, monitoring, and support measures.