Family Business: a Corporate Social Responsibility View
Family firms (FFs) are well positioned to exploit CSR (corporate social responsibility) as a powerful approach to enhance their strategy creating value for the business and its stakeholders. The research on FF and CSR shows mixed results. In fact, FFs are less socially responsible than their non-family counterparts at least on some dimensions of CSR (Cruz et al. 2014; Hirigoyen & Poulain — Rehm 2014). This is puzzling as the socio-emotional wealth that characterises FFs, should introduce a positive bias to CSR. I suggest that the well-known 3-circle model (Tagiuri & Davis 1982) offers a framework that helps us to understand FFs strenghts and weaknesses related to CSR.
The 3-circle model captures the complexity dynamics of family — firm interactions. It also helps to track its evolution over time. Looking at the model from a CSR perspective, we can easily understand why FFs develop a level of SEW usually higher than non-FFs. This emotional endowment is due to the key positions that Family Owner- employees, family owners and family employees play in the Family — Firm concern. Because of the effect of such a SEW, CSR in FFs is normally takes the following directions (while other directions are overlooked):
Family members are active cytizens and take care of their communities because the family’s and firm’s reputation can benefit from this involvement;
The family business is interested in developing good relationships with employees and other stakeholders (particularly the one located close to the business and the family residence)
Family owners (because of the control stake and the SEW) tend to lead the FF with a long term perspective, acting as responsible owners.
Good governance practices are more often overlooked (again due the the specific role of family owner-employees). This aspect may weaken FFs approach to CSR.
The 3-circle model can thus be used to discover why SEW can at the same time shows positive and negative effects in general and referred to CSR in particular. It finally shows evolutionary paths where family control does not conflict with good governance practices, helping to strengthen FFs approach to CSR.