Drivers of selectivity in family firms: Understanding the impact of age and ownership on CSR

A family firm's decision to engage in Corporate Social Responsibility (CSR) is a complex one, and many contradictory findings exist to explain why a firm invests in CSR. Socioemotional selectivity theory (SEST) suggests that family firms' selectivity changes over time, which affects their relationships and therefore their engagement in CSR. To study these effects, we examined 1436 family and non-family firms over an eight-year period to show that ownership structure (family vs. non-family firm) and age drive CSR engagement. While family firms are more likely to invest in CSR activities than non-family firms, we found that as family firms age, this changes. In fact, as family firms age, they become more selective and invest less heavily in CSR activities. Our findings highlight the importance of studying the heterogeneity in firm-level investments in CSR as well as the impact of selectivity on their strategic investments.