General studies of corporate social responsibility: stakeholder theory
As early as the 1930s, some scholars proposed the concept of corporate social responsibility. It is generally believed that Howard Bowen’s publication of Social Business of the Businessman in 1953 was the beginning of modern research on CSR. In recent decades, there has been much research on CSR, especially in the 1980s and 1990s. The introduction of stakeholder theory has greatly expanded the empirical research on CSR and has become the mainstream theory in this field. One important reason is that stakeholder theory provides a convincing answer to the question of “Whom should the enterprise be responsible for?”
Before stakeholder theory, scholars generally accepted Carroll's “pyramid model of corporate social responsibility,” which includes economic responsibility, legal responsibility, ethical responsibility, and charitable responsibility (Carroll 1991). Although this model has been widely applied, there are some imperfections. Carroll admitted that the meaning of “social” in CSR was vague, which did not clearly define who the company should be responsible for Carroll (1991). In this context, scholars who advocate stakeholder theory emphasize that enterprises comprise a collection of stakeholders and the entity for stakeholders to realize their interests. The survival and development of enterprises depend on the sustained support of stakeholders, so enterprises have the responsibility to generate value for these stakeholders (Freeman et al. 2013: 20–24). These stakeholders include any group or individual who affects or is affected by the company's goals (Freeman 2006: 2), such as shareholders, employees, customers, suppliers, communities, and governments. In this theoretical framework, the object of CSR is clearly defined as the stakeholders of the enterprise. This definition is rather conducive to CSR measurement, evaluation, and analysis (Clarkson 1995). Based on this theoretical progress, a large number of empirical studies on CSR have emerged.
Next, stakeholders are not only passive managers of CSR but also active influencers of CSR when they realize that corporate behavior has an impact on themselves. In general, these stakeholders can influence CSR on three levels (Aguinis and Glavas 2012). The first level is the institutional level. For instance, the government can encourage enterprises to invest in CSR by establishing a sound legal system and creating a good market environment so that CSR can bring positive feedback to enterprises (Christmann and Taylor 2006; Brammer et al. 2009; Li 2010). The second level is the organizational level; for example, consumers can punish a lack of CSR by boycotting corporate products (Sen and Bhattacharya 2001). The third level is the individual level at which the social identity and value system of management affect their cognition of CSR and ultimately affect CSR (Mudrack 2007; Muller and Kolk 2010; Gao et al. 2011). However, there are few empirical studies on the influence of family factors on CSR, especially in China. In fact, the family involved in the enterprise is often an important stakeholder of the enterprise. Their active participation in the operation and management of the enterprise is bound to have an important impact on CSR.
Social responsibility of family business
It is generally suggested by research on the family business that family involvement makes enterprises different from nonfamily enterprises (Kraus et al. 2011). If we focus on CSR among enterprise behaviors, the question is: Compared with nonfamily enterprises, what is the difference in family enterprises' social responsibility?
The theory of socioemotional wealth suggests that family business is different from nonfamily business in that family business specifies socioemotional wealth as its primary goal (Gómez-Mejía et al. 2011). This concept of socioemotional wealth has rich connotations, including sustaining the family's control and influence on the business, realizing family inheritance, maintaining a harmonious relationship among family members, supporting family members' organizational identity and commitment to the enterprise, and maintaining good social relations to increase the family's social capital (Berrone et al. 2012). In this sense, the main principle of decision-making regarding family business management is whether it can enhance the family's socioemotional wealth. Some studies have demonstrated that if a decision could reduce business risk but could not increase socioemotional wealth, family businesses would be more unlikely to adopt a decision than nonfamily businesses (Gómez-Mejía et al. 2011). For instance, some olive oil family businesses in southern Spain would not participate in enterprise cooperatives to maintain the control and influence of the family on the enterprise, although cooperation could reduce the operational risk of the enterprise (Gómez-Mejía et al. 2007).
On the basis of this theory, some scholars believe that CSR can establish a good corporate image and improve corporate reputation (Maignan et al. 1999; Brammer and Pavelin 2006; Li and Zhang 2010), which is exactly the socioemotional wealth that family businesses value (Zellweger et al. 2013). Therefore, family businesses would actively perform CSR to improve corporate reputation, even though the fulfillment of CSR could not improve the financial performance of enterprises. In contrast, nonfamily businesses pay more attention to economic performance and thus are less active in fulfilling social responsibility than family businesses. Some empirical studies have found that, compared with nonfamily businesses, the waste discharged by family businesses is less harmful to the environment (Berrone et al. 2010); the training investment and welfare level of employees in the family business are higher; the loyalty of employees is higher, and the turnover rate is lower (Reid and Harris 2002; Uhlaner et al. 2004); the overall social responsibility performance of the family business is also higher (Dyer and Whetten 2006; Zhou 2011).
However, under the framework of neoclassical economics, some scholars insist that there is no essential difference between the controlling family and the owners and managers in nonfamily enterprises. They are all rational people with the goal of maximizing their own economic interests. Moreover, since the controlling family holds more ownership of the enterprise, they would value the economic performance of the enterprise more than the general managers, even at the cost of other stakeholders, and they would not bear more social responsibility (Gómez-Mejía et al. 2001; Le Breton-Miller and Miller 2009). For example, studies have shown that the controlling family will seek private interests for their own family by sacrificing the interests of other shareholders (Morck and Yeung 2003). Once these family businesses control the economy of the whole country, they will also have a negative impact on the social welfare system. One study demonstrates that infrastructure, health care, and education services are generally worse in countries with many family-controlled large enterprises (Morck and Yeung 2004).
Some scholars believe that the ultimate goal of those behaviors, which seem to pursue socioemotional wealth, is to maximize family economic interests. The most typical example is the enterprise layoff. Studies reflected that, compared with nonfamily businesses, family businesses are less likely to lay off employees (Stavrou et al. 2007). However, if layoffs were inevitable, that is, keeping people on the payroll seriously hindered the development of enterprises, family business would lay off more employees for the protection of family economic interests than nonfamily business (Block 2010). Furthermore, the average payment of employees in family businesses is lower than that of nonfamily businesses, although family businesses are less likely to lay off employees (Bassanini et al. 2011). Therefore, the management decision of employment in the family business may not be made for the sake of accumulating socioemotional wealth, instead, for the consideration of strategic balance, that is, to ensure the stability of employment and reduce the employees' payment at the same time, which could reduce the operational risk of business.
In summary, theories of the social responsibility of family businesses are still controversial, and inconsistent results are generated by empirical research. On the one hand, this is due to controversial definitions of the family business (Chu 2004). Given that the vast majority of private enterprises are affected by families to different degrees, an increasing number of relevant studies have begun to abandon the dichotomy of “family business” and “nonfamily business” and regard family business as a variable of “family involvement” with continuous distribution to accurately examine the family influence on corporate behaviors and its dynamic changes (Li and Zhu 2014). This article also adopts this approach.
On the other hand, more importantly, these studies generate controversial results about the motivation and logic of management decision-making in family businesses. The debate in the existing literature is whether to emphasize the social motivation or the economic motivation of family behavior. Deriving from their respective basic presuppositions, these two arguments deduce different research conclusions. This article suggests that the family is not a unitary organization. Instead, it is dual, especially in China, which is rooted in profound historical traditions. Ebrey (1984) pointed out that the traditional Chinese family is the incarnation of two ideal types. One is called a “clan” (zong, 宗), which originates from ancestor worship. It is the kinship network based on patrilineal relationships, seniority, and affinity. The kinship network inherited by the wife's eldest son is called the “major clan” (da zong, 大宗), while other networks inherited by other sons are called the “minor clan” (xiao zong, 小宗). The other ideal type is called “family” (jia, 家), which is the political and economic unit inherited by the aristocrats in the pre-Qin period, similar to the “state” (guo, 国) of the feudal princes. The terms “a state with a thousand chariots” (qianshengzhiguo, 千乘之国) and “a family with a hundred chariots” (baishengzhijia, 百乘之家) all describe the scale of these political and economic units. With the change of the times, especially the disintegration of the feudal system, the land was in ceaseless transaction and division. The family, based on land, eventually evolves into a kinship group of cohabitation and common wealth and becomes a basic economic unit in traditional society (Ebrey 1984). Compared with the clan, the family is a relatively independent and detached unit, since the basis of the family is land and property so that it could be “establishing a family,” “dividing a family,” and “destroying a family” by the acquisition, distribution, and consumption of land and property, respectively. This is not the same as the spread of a clan. The basis of the clan lies in its patrilineal lineage, and its source is a common ancestor. Although there is an increasing number of descendants, the birth of descendants reflects the proliferation or spread of the branches of the original clan. The original clan will only be continued and will not disintegrate.
In this sense, the goals of clan and family are different. The basic goal of the clan is to continue, including maintaining ancestor worship and sacrifice, maintaining harmonious relationships within the clan network, and ultimately maintaining the continuous spread and continuation of the clan. For this reason, the clan establishes a set of hierarchical ethical norms based on seniority and affinity and internalizes them through various ritual activities, which is exactly the goal of the whole traditional Chinese society. Therefore, the unity and continuation of the clan in traditional society can gain a reputation. The whole traditional society admires those “aristocratic families” and “living together for generations.” However, the basic goal of “family” is maintaining existence. To survive better, families must continuously accumulate economic wealth. Although a family will pursue social reputation through charity, its foundation still lies in economic wealth (Ebrey 1984). Therefore, the “family,” based on property, pursues economic goals, while the “clan,” based on blood ties, emphasizes noneconomic goals. The real Chinese family is a mixture of “family” and “clan,” which is consequently dual.
The duality of the family is introduced into business management behavior with the combination of family and business. The complex social responsibility of family businesses can be related to this concept. It is worth exploring how the family chooses its motive. In the context of Chinese social culture, this may relate to the specific object of behavior. As Fei (1998) pointed out, the structure of Chinese society is a “differential mode of association” (cha xu ge ju, 差序格局) (Fei 1998: 26).
Under this mode, people employ different standards to interact with people in different interpersonal relationships. Empirical research demonstrates that the concept of “cha xu ge ju” could be adopted to analyze Chinese enterprises. For instance, entrepreneurs in Chinese enterprises group organization members into different types according to closeness and loyalty and form different networks of “us” and establish trust patterns accordingly, which would ultimately affect the organizational behavior within the enterprise (Zheng 2005: 297–378). Similarly, this article argues that the motivation and behavior of families are different in the face of different behavior objects that have different relationships with the family. Regarding CSR behavior, the behavioral objects of families are other stakeholders of the enterprise. Due to the variety of enterprise stakeholders, this article would classify the stakeholders of enterprises first and infer the motivation of family behavior according to the relationships between family and different types of stakeholders to put forward specific assumptions about the relationship between family involvement and CSR.