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<p>ESG practices are progressively becoming the framework for corporate sustainability. It is particularly true for family firms to preserve socioemotional wealth and create long-term value through ESG activities. However, the literature offers mixed evidence on the role of family leadership in shaping family firms’ sustainability strategies. Drawing on behavioral agency theory, this study focuses on the family membership of CEOs and argues that family CEOs are more likely to perceive ESG practices as a potential gain, whereas nonfamily CEOs may view them as a potential loss; therefore, family CEOs are expected to outperform nonfamily CEOs in ESG practices. Integrating institutional theory, we further argue that this effect depends on external institutional conditions, including regional clan culture, formal institutional development, and party organization governance, which shape the cost–benefit structure of ESG activities and thereby strengthen the positive effect of family CEOs on family firms’ ESG performance. Using a sample of Chinese listed family firms from 2009 to 2024, we find strong evidence supporting our arguments. Extending the focus from CSR to ESG, this study helps reconcile the mixed evidence on the role of family CEOs in corporate sustainability, advances behavioral agency theory in the family business context, and highlights the institutional contingencies in shaping family CEOs’ ESG decisions.</p>

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Family CEOs versus nonfamily CEOs in family firms: Who perform better in ESG practices?

  • 期刊论文

  • 发表日期：

    2026年7月29日

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  • Jin-hui Luo,
  • Yilong Wu,
  • Jason Zezhong Xiao

摘要

ESG practices are progressively becoming the framework for corporate sustainability. It is particularly true for family firms to preserve socioemotional wealth and create long-term value through ESG activities. However, the literature offers mixed evidence on the role of family leadership in shaping family firms’ sustainability strategies. Drawing on behavioral agency theory, this study focuses on the family membership of CEOs and argues that family CEOs are more likely to perceive ESG practices as a potential gain, whereas nonfamily CEOs may view them as a potential loss; therefore, family CEOs are expected to outperform nonfamily CEOs in ESG practices. Integrating institutional theory, we further argue that this effect depends on external institutional conditions, including regional clan culture, formal institutional development, and party organization governance, which shape the cost–benefit structure of ESG activities and thereby strengthen the positive effect of family CEOs on family firms’ ESG performance. Using a sample of Chinese listed family firms from 2009 to 2024, we find strong evidence supporting our arguments. Extending the focus from CSR to ESG, this study helps reconcile the mixed evidence on the role of family CEOs in corporate sustainability, advances behavioral agency theory in the family business context, and highlights the institutional contingencies in shaping family CEOs’ ESG decisions.