THE ROLE OF FAMILY OWNERSHIP TOWARD CORPORATE SOCIAL RESPONSIBILITIES: GOVERNANCE AS A MODERATING VARIABLE in INDONESIA
DOI:
https://doi.org/10.18533/ijbsr.v11i1.1349Keywords:
CSR Performance, Internal CSR, External CSR, Corporate Governance, Stochastic Frontier Approach (SFA),Abstract
This study examines the financial implications of corporate social responsibility (CSR) in family firms in Indonesia and the role of corporate governance (CG) in improving the CSR performance of family-controlled firms. Family firms, on the one hand, are known as firms that only care about families, are run privately and ignore wider CSR. On the other hand, it is precisely because it really maintains the "name" so that the family firms will strive to do CSR well to its stakeholders. Corporate governance is measured by using the Stochastic Frontier Approach (SFA). The research sample consists of 102 firm years. The data analysis method uses moderated regression analysis (MRA). The results of this study show that family ownership in manufacturing companies in Indonesia increases CSR disclosure, regardless of whether the stakeholders come from internal or external parties. The results also show that corporate governance, both effectively and efficiently, has no effect on CSR disclosure in general in family firms. However, effective corporate governance can strengthen the relationship between family ownership and CSR disclosure if it is based on internal and external stakeholders. Meanwhile, efficient corporate governance is proven to be unable to enhance the influence of family ownership on CSR disclosure, both in general and in separated way between internal and external stakeholders.
References
References
Aigner, Dennis, Lovell, C.A. Knox & Schmidt, Peter. 1977. Formulation and Estimation of Stochastic Frontier Production Function Models, Journal of Econometrics 6: 21-37.
Aronoff, C. E. & Ward, J. L. 1995. Family-Owned Businesses: AThing of The Past or A Model for The Future? Family Business Review 8(2): 121-130.
Attig, N., Boubakri, N., El Ghoul, S. &Guedhami , O. 2015. The Global Financial Crisis, Family Control, and Dividend Policy, Financial Management 25(2): 291-313.
Aupperle, K. E., Carroll, A. B. & Hatfield, J. D. 1985. An Empirical Examination of The Relationship between Corporate Social Responsibility and Profitability, Academy of Management Journal 28(2): 446-463.
Bansal, Nidhi & Sharma, Anil K. 2016. Audit Committee, Corporate Governance and Firm Performance Empirical Evidance from India, International Journal of Economics and Finance 8(3): 1-14.
Bassiouny, Dina El & Bassiony Noha El. 2018. Diversity, Corporate Governance and CSR Reporting: A Comparative Analysis Between Top-Listed Firms in Egypt, Germany and The USA, Management of Environmental Quality:An International Journal, https://Doi.Org/10.1108/MEQ-12-2017-0150.
Baur, M. (2014). Successors and The Family Business: Novel Propositions and A New Guiding Model for Effective Succession, The Journal Of American Academy o of Business, Cambridge 19(2): 133-138.
Benlemlih, M & Blitar, M. 2018. Corporate Social Responsibility and Investment Efficiency , Journal Business Ethics 148: 647-671.
Berrone, P., Cruz, C., Gomez-Mejia, L. R., & Larraza-Kintana, M. (2010). Socio-emotional Wealth and Corporate Responses to Instutional Pressures: Do Family-Controlled Firms Pollute Less? Administrative Science Quarterly 5: 82-113.
Berrone, Pascual, Cruz, Cristina & Gomez-Mejia, Luis R. 2012. Socio-emotional Wealth in Family Firms : Theoretical Dimensions, Assesment Approaches, and Agenda for Future Research, Family Business Review 25 (3): 258-279.
Cabeza-Garcia, Laura, Sacristan-Navarro, Maria & Gomez-Anson, Silvia. 2017. Family Involvement and Corporate Social Responsility Disclosure, Journal of Family Business Strategy 4(2): 1-14.
Cabeza-Garcia, Laura, Sacristan-Navarro, Maria & Gomez-Anson, Silvia. 2017. Family Involvement and Corporate Social Responsibility Disclosure, Journal of Family Business Strategy 4(2): 1-14.
Campopiano, Giovanna & De Massis, Alfredo. 2014. Corporate Social Responsibility Reporting: A Content Analysis in Family and Non-Family Firms, Journal Business Ethics DOI 10.1007/S10551-014-2174-Z.
Cheng, M., Dhaliwal, D. & Zhang, Y. 2013. Does Investment Efficiency Improve After the Disclosure of Material Weaknesses in Internal Control Over Financial Reporting? Journal of Accounting and Economics 56(1): 1-18.
Cook, Kristen A, Andrea M Romi, Daniela Sanchez & Juan Manual Sanchez. 2018. The Influence of Corporate Social Responsibility on Investment Efficiency and Innovation, Texas Tech University, USA.
David, P. 1983. Realizing The Potential of Family Business, Organizational Dynamic 12(3):47-56.
Delmas, M. A., & Toffel, M. W. (2008). Organizational Responses to Environmental Demands: Opening The Blacks Box, Stategic Mangement Journal 29: 1027-1055.
Donaldson, Thomas & Preston, Lee E. 1995. The Stakeholder Theory of The Corporation: Concepts, Evidence, and Implications, Academy of Management Review 20(1): 65-91.
Dyer Jr., W Gibb & Whetten, David A. 2006. Family Firm and Social Responsibility: Preliminary Evidence from the S&P 500, ET & P Baylor University: 1042-2587.
Eng, L.L & Mak, Y.T. 2003. Corporate Governance and Voluntary Disclosure, Journal Accounting Public Policy 22: 325-345.
Ferrero, Eugene F. & Jensen, Michael C. Separation of Ownership and Control, Journal of Law and Economics 26: 301-325.
Ferrero, Jenniver Martinez, Ariza, Lazaro Rodriguez, & Ballesteros, Beatriz Cuadrado, 2015. Is Financial Reporting Quality Related Corporate Social Resposibility Practices? Evidence from Each Other, Symphonya Emerging Issue in Management 1: 7-15.
Garas, Samy & ElMassah, Suzanna. 2018. Corporate Governance and Corporate Social Responsibility Disclosures: The Case of GCG Countries. Critical Perspectives on International Business https:// dol.org/10.1108/cpoib-10-2016-0042.
Gomez Mejia, L. R., Cruz, C., Berrone, P., & De Castro, J. (2011). The bind that ties: Socioemotional wealth preservation in family firms, Academy of Management Journal 44: 81-95.
Gomez-Mejia, L. & Cruz, C., dan Imperatore, C. 2014. Financial Reporting and The Protection of Socioemotional Wealth in Family-Owned Firms, European Accounting Review 23(3): 387-402.
Gomez-Mejia, L. R., Cruz, C., Berrone, P., & De Castro, J. (2011). The bind that ties: Socioemotional wealth preservation in family firms, Academy of Management Annals 5: 653-707.
Gomez-Mejia, L.R., Haynes, K.T., Nunez-Nickel, M., Jacobson, K.J. & Moyano-Fuentes, J. 2007. Socio-emotional Wealth and Business Risks in Family-Owned Firms: Evidence from Spanish Olive Oil Mills, Administrative Science Quarterly 52(1): 106-137.
Gomez-Mejia, L.R., Hayness, K.T., Nunez-Nickel, M., Jacobson, K.J. & Moyano-Fuentes, J. 2007. Socio-emotional Weath and Business Risks in Family-Owned Firms: Evidence from Spanish Olive Oil Mills, Administrative Science Quarterly 52(1): 106-137.
Gomez-Mejia, L.R.,Welbourne, T. M. & Wiseman, R.M. 2000. The Role of Risk Sharing and Risk Taking under Gainsharing, Academy of Management Review, 25(3): 492-507.
Gray, Rob, Owen, Dave & Maunders, Keith. 1988. Corporate Social Reporting: Emerging Trends in Accountability and the Social Contract, Accounting, Auditing & Accountability Journal 1(1): 6-20.
Izzo, Maria Federica & Ciaburri, Mirella. 2018. Why Do They Do That? Motives and Dimensions of Family Firms CSR Engagement, Social Responsibily Journal 8: 1-19.
Jizi, M.I., Salama, A. & Dixon, Stralling. 2014. Corporate Governance and Corporate Social Responsibilty Disclosure: Evidence from the US Banking Sector, Journal of Bussiness Ethics 125(4): 601-616.
Khan, A., Muttakin, M. & Siddigui, J. 2013. Corporate Governance and Corporate Social Responsibility Disclosures: Evidence from an Emerging Economy, Journal of Business Ethics 114(2): 207-223.
Lamb, Nai H. & Frank C. Butler. 2016. The Influence of Family Firms and Institutional Owners on Corporate Social Responsibility Performance, Business dan Society :1-33. DOI: 10.1177/00077650316648443.
Lambert, Richard, Leuz, Christian & Verrecchhia, Robert E. 2007. Accounting Information, Disclosure, and the Cost of Capital, Journal of Accounting Research 45(2): 385-420.
Lehman, Erik, Warning, Susanne & Weigand, Jurgen. 2004. Governance Structure, Multidimensional Efficiency and Firm Profitability, Journal of Mangement and Governance 8: 279-304.
Mathews, M.R. 1995. Social and Environmental Accounting: A Practical Demonstration of Ethical Concern? Journal of Business Ethics 14: 665-671.
Raar, Jean. 2002. Environmental Initiatiaves: Towards Tripe Bottom Line Reporting, Corporate Commmunications: An International Journal 7(3): 169-183.
Shahzad, Faisal, Rehman, Ijaz Ur, Nawaz Mir, Faisal & Nawad, Noman. 2018. Does Family Control Explain Why Corporate Responsibility Affects Investment Efficiency? Corporate Social Responsibility and Environmental Management . DOI: 10.1002/csr.1504.
Susanto,A.B. 2005. World Class Family Business, Edisi Pertama. Jakarta Selatan: Quantum Bisnis dan Manajemen.
Tagiuri, R. & Davis, J. 1996. Bivalent Attributes of The Family Firm, Family Business Review 9(2): 199-208.
Downloads
Published
Issue
Section
License
Copyright (c) 2021 Bambang Hariadi Dr
This work is licensed under a Creative Commons Attribution 4.0 International License.
Authors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).
