Balancing natural environmental concerns of internal and external stakeholders in family and non-family businesses Donald O. Neubaum a,1 , Clay Dibrell b, *, Justin B. Craig c,2 a Oregon State University, 400E Bexell Hall, College of Business, Corvallis, OR 97330, United States b School of Business Administration, The University of Mississippi, 320 Holman Hall, University, MS 38677, United States c School of Business, Technology and Sustainable Development, Bond University, Gold Coast, Queensland, Australia 1. Introduction If firms face the challenge of being attentive to multiple stakeholders, then which set of stakeholder demands should gain more attention than others? Which set or sets of stakeholder expectations and concerns must the firm attend to should it expect to survive, prosper and grow? Stakeholder theory (Freeman, 1984) has clearly outlined the numerous and often competing concerns which firms must satisfy, including the concerns of shareholders, employ- ees, the local community, the natural environment, the government, suppliers, and customers, to name a few. For family firms – firms where members of the family leverage influence through manage- ment or ownership – the list is even longer as the demands of stakeholders within the family add further complexity to the mix (Bingham, Dyer, Smith, & Adams, 2011). While researchers have long acknowledged the criticality for firms to be attentive to the demands and expectations of multiple stakeholders (Hillman & Keim, 2001), surprisingly little research effort has been devoted to investigating the relative attention different stakeholder groups should receive. More seriously, given that family and non-family firms face a different set of stakeholders to satisfy, little research has considered how these two types of firms must respond to those demands in the effort for each type to remain a viable and growing firm. Family and non-family firms not only face a different set of competing stakeholder concerns, but also are believed to be guided by different sets of goals and motives (Berrone, Cruz, Gomez-Mejia, & Larraza-Kintana, 2010). Beyond the economic and profit motives which are paramount in non-family firms, family firms are further concerned with accumulating and maintaining socioemotional wealth (Astrachan & Jaskiewicz, 2008), defined as ‘‘the stock of affect-related value that the family has invested in the firm’’ (Berrone et al., 2010, p. 82). Because of their feelings of vulnerability stemming from negative assessments by external stakeholders, family businesses may place greater weight upon the interest of external stakeholders than their non-family counter- parts in an effort to maintain their socioemotional wealth (Berrone et al., 2010; Oliver, 1991). Within the family business literature, numerous studies have urged researchers to use a stakeholder lens to shed light on the actions and performance of family firms (Bingham et al., 2011; Cabrera-Suarez, de la Cruz Deniz-Deniz, & Martin-Santana, 2011; Hart & Sharma, 2004; Litz, 1997; Stavrou, Kassinis, & Filotheou, 2007). This study responds to that challenge as we extend research by investigating the relationship between attentiveness to two key organizational stakeholders – namely, the firm’s employees and the natural environment – and organizational performance within a sample of family and non-family firms. Journal of Family Business Strategy 3 (2012) 28–37 A R T I C L E I N F O Article history: Received 5 January 2012 Accepted 11 January 2012 Keywords: Environmental concerns External stakeholders Internal stakeholders Family business Firm performance Stakeholder theory A B S T R A C T While researches have long suggested that firms must be attentive to their key stakeholders, the question of how attention to different stakeholders may have different benefits for different firms has not been well addressed. This is especially true in the case of family businesses, which confront a unique set of stakeholder challenges, and socioemotional goals not confronted by non-family firms. In this study, we investigate the effect of these competing demands across family and non-family firms. We argue that while being attentive to both internal and external stakeholders is important to firm performance in family and non-family firms, family firms can benefit more when they match their concern for natural environmental stakeholders with a demonstration of concern for their employees. By effectively leveraging the power of these critical internal stakeholders, family firms can gain competitive advantages over non-family firms as it is through these internal stakeholders which the demands of external stakeholder are often met. ß 2012 Elsevier Ltd. All rights reserved. * Corresponding author. Tel.: +1 662 915 1986; fax: +1 662 915 5821. E-mail addresses: Don.neubaum@bus.oregonstate.edu (D.O. Neubaum), cdibrell@bus.olemiss.edu (C. Dibrell), jcraig@bond.edu.au (J.B. Craig). 1 Tel.: +1 541 737 6036. 2 Tel.: +61 7 55951161. Contents lists available at SciVerse ScienceDirect Journal of Family Business Strategy jou r nal h o mep ag e: w ww .elsevier .co m /loc ate/jfb s 1877-8585/$ – see front matter ß 2012 Elsevier Ltd. All rights reserved. doi:10.1016/j.jfbs.2012.01.003