Abstract

Family firms are the foundation of economies across the world. Yet, little is understood about what motivates sustainability in these firms, particularly in developing economies. In this study, we examine family forestry and tourism firms in Chile and India and use a novel stated-choice method to understand preferences for sustainability and the trade-offs with profit maximization, law and regulation, and family relations (among others). There were heterogeneous preferences across the sample, with respondents favoring financial outcomes and viewing regulation negatively. Respondents preferred positive environmental impacts, and this was significantly favored by tourism firms. Forestry firms were particularly focused on maintaining satisfactory family relationships, where there was stronger family involvement in the firm's management decisions. Indian respondents were more likely to prefer the expansion option in the choice study (financial outcomes), while Chileans preferred the eco-labeling choice (sustainability), suggesting more supportive sustainability norms in Chile. Chileans were more likely to exceed legal compliance in their choice selection and favored positive environmental impacts more. Overall, tourism firms were larger in terms of revenues and favored the eco-labeling choice with positive environmental impacts but with minimal regulations, while forestry favored expansion. These differences may be driven by the resources available to tourism firms for supporting sustainability measures and the importance of sustainability to their business models. Policies to support sustainability among family firms must account for their heterogeneity and must provide supports and incentives rather than regulations to facilitate sustainability.