Purpose and Cash Flow: When will Family Firms Contribute to the Environment?

This study explores the influence of family firms’ socioemotional wealth (SEW) purpose and cash flow on their environmental contributions. It uses data from 754 publicly listed and over-the-counter family firms in Taiwan from 2016 to 2022. Following previous research, SEW is distinguished into focused SEW and broad SEW and cash flow patterns, mapped into firm life cycle stages. Empirical results show focused SEW is negatively correlated with the environmental contribution of family firms, while broad SEW is positively correlated. From a cash flow perspective, during the introduction stage, focused SEW family firms tend to lag in environmental contribution. In the mature stage, focused SEW family firms lead in environmental contribution, while broad SEW family firms lag behind. Empirical evidence suggests that the reference point of family firms is not fixed but changes dynamically as the firm progresses through its life cycle. This study highlights the consideration of SEW by family firms, which depends on their specific life cycle stage.