Sustainability is no longer a corporate add-on. From the UN 2030 Agenda (Brundtland, 1987) to the OECD recovery framework (OECD, 2020) and the EU Treaty (EU-OJEU, 2012), responsible business conduct across the triple bottom line—economic, social and environmental (Elkington, 1997)—is a strategic imperative.
Yet most research has focused on large listed firms. This leaves a critical blind spot: small and medium-sized enterprises (SMEs), which represent around 90% of businesses worldwide and more than half of global employment (European Commission, 2022). Among them, family firms dominate—two-thirds of companies globally (Family Firm Institute, 2022).
A recent study by Herrero, López, and Ruiz-Benítez (2024), published in Business Strategy and the Environment, takes this reality seriously. By analysing all three pillars of sustainability simultaneously in Spanish family SMEs, the authors uncover results that run counter to widely held expectations.
The surprising results
1. Economic sustainability: No clear advantage
While family firms often benefit from long-term orientation and strong stewardship (Lumpkin & Brigham, 2011), they may also prioritize socioemotional wealth—family control, legacy, identity—over profitability (Gómez-Mejía et al., 2007; 2011). Risk aversion, reluctance to bring in external managers, or conservative growth strategies (Berrone et al., 2010; Patel & Chrisman, 2014) can offset their advantages. Thus, strengths and weaknesses balance out.
2. Environmental sustainability: Again, similar performance
Here, two opposing forces collide: the desire to preserve reputation and legacy versus risk aversion when investments threaten family wealth (Dal Maso et al., 2020; Doluca et al., 2018). In smaller firms, where family capital is often directly at stake, caution tends to dominate.
3. Social sustainability: A clear strength
The study finds that family SMEs outperform non-family firms in social sustainability—employee relations, community engagement and stakeholder care. This aligns with prior work suggesting that close relationships and social capital are embedded in family firms (Dou et al., 2014). Crucially, they achieve this without compromising long-term economic sustainability.
The generational factor: A leadership lesson
One of the most intriguing findings concerns generational involvement. The longer the family tradition, the stronger the environmental commitment. Firms with a multi-generational legacy have more reputation to protect (Berrone et al., 2010). However, the more generations simultaneously involved in management, the weaker the environmental performance. Intergenerational conflict and diverging priorities may dilute strategic focus (Samara et al., 2018; Fang et al., 2021).
In short, family ownership does not automatically make firms more sustainable. Family SMEs excel socially, but economic and environmental sustainability hinge on governance choices, generational dynamics, and strategic clarity. Sustainability, therefore, is not a family attribute—it is a leadership challenge.
Reference: Herrero, I., Lopez, C., & Ruiz‐Benítez, R. (2024). So… are family firms more sustainable? On the economic, social and environmental sustainability of family SMEs. Business Strategy and the Environment, 33(5), 4252–4270.
Liliana Dinis, CATÓLICA-LISBON Family Business Platform