Abstract
Introduction
Family firm philanthropy, defined as giving back and making a difference to society, beyond the firm and its owning family (cf. Maclean & Harvey, 2020), provides financial support to societies around the world. Business-owning families often actively engage in philanthropy through their firms to respond to societal needs (Feliu & Botero, 2016; Harvey et al., 2011). The motivation to give back to society through philanthropy is often cited to be of great importance to business-owning families (Murdoch, 2024). Yet related research is still in an early stage (Maclean & Harvey, 2020). Despite significant interests of practitioners (Vogel et al., 2020) and initial important academic insights (Campopiano et al., 2014; Feliu & Botero, 2016; Ge & Micelotta, 2019), the emerging scholarship on family firm philanthropy is still lacking conceptual clarity and theoretical advancements (Bhatnagar et al., 2020; Campopiano et al., 2014). In particular, it remains unclear how the founder affects the family firm’s philanthropic behavior and whether the respective influence of the founder on the organization’s philanthropy becomes stronger or weaker over time. This is an important research gap, as an abundant body of family firm research has highlighted the importance of the founder for later family firm decision-making (Erdogan et al., 2020; Jaskiewicz et al., 2015; Kammerlander et al., 2015).
To address this important research gap, we draw on identity theory in the context of philanthropy (Maclean & Harvey, 2020), which helps move beyond the traditional focus on self-interest and economic rationality when exploring decision-making and organizational behavior in (family) firms (Gruber & MacMillan, 2017). Specifically, building on social identity theory (Stets & Burke, 2000; Tajfel & Turner, 1979), research differentiates between two types of founder identities (Fauchart & Gruber, 2011; Sieger et al., 2016).
Moreover, we draw on two important contingency variables that likely affect the relationships between founder identities and philanthropic engagement to further advance research on founder identities. The first moderating variable relates to the enduring presence of the founder in the organization (Coman & Casey, 2020). In the context of business families, the founder is likely to be cherished over generations of family members involved in the business (De Massis et al., 2016; Erdogan et al., 2020; Jaskiewicz et al., 2015). Hence, one might assume that the number of family generations between the founder and the current family owners affects the prevalence of founder identity in the firm and hence moderates the effect of founder identity on family firm philanthropy. Second, it is likely that the family’s transgenerational control intentions (TCI; Zellweger et al., 2012) also affect the prevalence of founder identity in the firm and thus act as a moderator. In the business family context, the wish to transfer the business to the next generation is often of great importance and has been shown to shift decision makers’ attention toward long-term, family-related goals rather than short-term business goals (Zellweger et al., 2012, 2013). This focus on family-related goals might affect the relationship between the founder’s identity and the philanthropic engagement. In sum, we aim to answer the following research questions:
Our research relies on data collected through an international survey of family business key decision makers. We obtained a total of 525 responses from various generations of family members, ranging from respondents being part of the founder generation to being members of the sixth generation of the founder’s descendants. In line with our reasoning, we find that a strong Missionary identity of the founder increases the philanthropic efforts of the family firm; this effect becomes stronger over generations of family control. Somewhat counter-intuitively, we also find a positive effect of the Darwinian identity on philanthropy, pointing to a neo-liberal view on philanthropy and to self-serving motives and benefits of engaging in philanthropy (Feliu & Botero, 2016; Maclean & Harvey, 2020). This Darwinian founder effect is, however, likely to be weakened if family members pursue transgenerational control intentions.
Our research contributes to existing scholarship in the following ways. First, our study provides important insights for family business scholars (Sasaki et al., 2020; Suddaby & Jaskiewicz, 2020) by showing empirically that the founder effect strengthens over time, yet only does so in the case of an “honorable” founder identity (i.e., Missionary founders). We further show that founders play a significant role, not only for innovation (Erdogan et al., 2020; Kammerlander et al., 2015) and entrepreneurship (Jaskiewicz et al., 2015) as highlighted in prior research, but also in fostering philanthropy. Moreover, we extend the ongoing discussion about the potentially ambiguous implications of TCI. Second, we contribute to the literature on founder identities. Relying on the established scale by Sieger et al. (2016), we test the long-term outcomes of different founder identities beyond the venture creation process, thereby focusing on social outcomes. Our results confirm a significant effect of founder identity on non-financial firm outcomes and display variation over time. Finally, we contribute to the literature on philanthropy (Acs & Phillips, 2002; Anheier & Leat, 2006; Dees, 2008). Adding to recent studies using an identity lens (Maclean & Harvey, 2020), we show how founder identities, deriving from the entrepreneurship literature, impact the philanthropic efforts of family businesses. We also contribute to this literature by showing how business-owning families and their characteristics matter to understanding philanthropy of firms, as the families’ generation and transgenerational intentions moderate the founder identity effects on philanthropy. Next to these theoretical and empirical contributions, our research also holds relevant insights for practitioners. Our study indicates that founder identities play an important role in family firm philanthropy and that the latter can be driven by Missionary as well as Darwinian motives. However, our study indicates that establishing a legacy-infused, normative commitment for philanthropy based on a Missionary identity might drive particularly robust and ambitious philanthropic engagement in family firms. Hence, family firm managers should be aware of and make use of the prevailing founder identity in the organization and ensure that they are aligned with the organizational values.
Literature Background and Hypotheses Development
Family Firm Philanthropy
Over the last decade, research focusing on philanthropy of family firms has started to flourish, given the prevalence of this type of organization around the world, but also because of their focus on non-financial goals. Initial research indicates that comparing family firms to non-family firms does not yield straightforward insights. Instead, these studies do not detect a general difference between family and non-family firms with regard to firm philanthropy but reveal the complex dynamics and motives driving family firm philanthropy (Atkinson & Galaskiewicz, 1988; Campopiano et al., 2014; Ge & Micelotta, 2019). While some studies (Dou et al., 2014) argue that family firms should express higher engagement in philanthropy due to their socioemotional wealth considerations, other studies highlight the parsimonious behavior of family firms, particularly if family members are involved in firm ownership and management (Campopiano et al., 2014), given that each investment in philanthropy reduces the owners’ own financial resources. 2
Highlighting this complexity, studies have uncovered the importance of context for family firm philanthropy (Bhatnagar et al., 2019, 2020; Ge & Micelotta, 2019) and the need to balance the overreliance on insights deriving from the United States (Feliu & Botero, 2016). Studies have also started to reveal important and unique drivers of family firm philanthropy, notably the quest to have a favorable family firm reputation (Bhatnagar et al., 2020; Ge & Micelotta, 2019; Harvey et al., 2011; Uhlaner et al., 2004), an upcoming family firm succession (Y. Pan et al., 2018), and the gender of family members (Campopiano et al., 2019). Collectively, scholars stress that family firm philanthropy can be driven by instrumental motives—such as to promote a favorable reputation (Ge & Micelotta, 2019) or to cover up corporate misconduct (Du, 2015)—as well as by value-based motivations (Astrachan et al., 2020; Feliu & Botero, 2016). The most common value-based motivation of family owners to engage in philanthropy is the desire to promote family members’ positive self-concepts and identification with the firm (Breeze, 2009). However, so far, we do not know anything about how the early days of the family firms, that is, the time of the founder, affect philanthropy. This is astonishing given that family firm research has already identified a substantial founder effect on other aspects of family firm behavior, such as innovation (Erdogan et al., 2020; Kammerlander et al., 2015) or entrepreneurship (Jaskiewicz et al., 2015). In particular—although various scholars highlight identity enhancement as a key motivation to engage in philanthropy—we do not yet know how the identity of the founder shapes family firm philanthropy. In this context, our study explores the role of the founder identity on family firm philanthropy. Doing so, we draw on two primary founder identity types—“Missionary founders” and “Darwinian founders” (Fauchart & Gruber, 2011; Sieger et al., 2016).
Missionary Founder Identity and Family Firm Philanthropy
The Missionary founder identity, as described by Fauchart and Gruber (2011), is characterized by the founder’s belief that firms ought to be change agents of society. As such, Missionary founders seek to fulfill their political vision and advance social causes through the firms they create (Ko & Kim, 2020). Missionary founders are driven to make the world a better place and to act responsibly and empathetically. They self-evaluate their actions through their own and their firms’ contributions to humanity and view their firms as role models for society. Missionary founders are determined to introduce new social practices and to show that a transformational change of the status quo is indeed possible (Sieger et al., 2016).
Although the insights generated by Fauchart and Gruber (2011) make a powerful contribution to the existing literature on founders, they have not yet fully reached the adjacent literature streams focusing on social motivations and outcomes, notably scholarship exploring the nexus between philanthropy and entrepreneurial firms such as family firms (Anheier & Leat, 2006; Dees, 2008; Maclean & Harvey, 2016). As a result, the influence of the founder’s Missionary identity on family businesses and their philanthropic efforts remains unexplored. This lack of insight is particularly surprising because Fauchart and Gruber (2011) hold that Missionary founders imprint the firms they create with their distinct self-concepts (Stinchcombe, 1965) and thus have long-lasting effects on the organizations’ social contributions. Specifically, research has revealed that values and visions of founders often persist beyond the founder’s departure from the firm (Geroski et al., 2010; Kimberly & Bouchikhi, 1995; Ogbonna & Harris, 2001).
The emerging literature on philanthropy in entrepreneurial firms finds that—in line with the Missionary founder identity—the “self” and “society” are intertwined for founders who choose to engage substantially in philanthropy through their firms (Giddens, 1991; Maclean & Harvey, 2020). As a result, these founders often identify as game changers or social crusaders (Maclean & Harvey, 2020). As such, the self-concept of Missionary founders involves seeking to change the status quo and promote their firms as role models for leading such holistic shifts.
We argue that Missionary founders who pursue a social mission through their firms upon venture creation are also driven by transformational motives once the firm is established; such identity hence promotes the family firm’s philanthropic engagement. Missionary founders are likely to embed their self-concept in their firms, which are intended to become change agents of society (Fauchart & Gruber, 2011) through a long-term philanthropic vision and investment. Accordingly, the founder’s family members, who are aware of the founder’s identity, are likely to uphold and extend the social mission of the founder beyond the start-up context. Specifically, the knowledge about the founder’s Missionary identity motivates later-generation family members to pursue a wider social vision for their organization by engaging in philanthropic causes.
Several family business studies have argued and provided support for the long-term effects of founding values. Hence, we argue that in the context of philanthropy, the family business is characterized by high levels of empathy among its key decision makers (McDonald & Messinger, 2011; Smith, 2006), which can be traced back to the missionary identity of the founder. Such empathy is associated with an enhanced sensitivity to injustice and inequality in the world (Smith, 2006). As a consequence, and in line with the missionary founder, the key decision makers of the family business are likely to perceive themselves as citizen of the world (Sieger et al., 2016) and hence to connect with disadvantaged groups regardless of personal ties or self-serving interests. Hence, being aware of the founder’s missionary identity promotes the firm’s holistic and substantial philanthropic engagement. The instilled feeling of social responsibility (Ko & Kim, 2020), the urge to revise the status quo in society (Wry & York, 2017) and the mission to advance a social cause (Gruber & MacMillan, 2017), which are all triggered by the awareness of family business having been started by a Missionary founder, increases family firm philanthropy. This leads us to the following hypothesis:
Moderating Role of Family Generation on Missionary Founder Identity
Although scholars emphasize the effect of founder identities on their firms (Fauchart & Gruber, 2011), it remains little understood how different generations of family members perceive the founder’s identity and its relevance for the firm. Specifically, it remains unclear how the influence of the founder changes over time (Coman & Casey, 2020). This lack of knowledge seems particularly pertinent, as we currently do not know whether the influence of the founder on the organization becomes stronger or weaker over generations. Hence, we are interested in the moderating effect of family generations on the role of the Missionary founder identity for family firm philanthropy.
Research indicates that over time, the founder’s identity may become an emotionally laden testimony of commitment (Sasaki et al., 2020) that creates a sense of purpose (Carton, 2018) and strongly influences current firm behavior (Hatch & Schultz, 2017; Ravasi & Schultz, 2006). Interestingly, recent studies highlight that subsequent generations of family members can selectively cherish those aspects of the past that they perceive as desirable (Sasaki et al., 2020). In line with such literature, we argue that the founder’s Missionary identity is a source of great pride for the business family and that the founder’s apparently noble character and dedication to social causes will be cherished and idealized by later family generations. 3 Over generations, the founder will become an important figurehead who enhances the family members’ collective identity with the founder’s missionary beliefs and societal values. As a result, these inheritor generations of family members are likely to enact and re-interpret the founder’s missionary identity by engaging in modern-day philanthropy through the family firm (cf. Bhatnagar et al., 2019, 2020). The more generations that have passed on the family firm since its inception, the prouder current family members are likely to be about the founder’s mission of doing good for society and their long history of giving back to society. As a consequence, their motivation to step into the founder’s footsteps by perpetuating the firm’s commitment toward philanthropy will increase over time. Accordingly, we propose that the number of generations between the founder and the current family business owners will moderate the relationship between a Missionary founder identity and family firm philanthropy. As such, later generation family members are particularly likely to enact the missionary identity of the founder by engaging in family firm philanthropy. Such charitable engagements enhance their sense of self-worth by—stepping in their ancestor’s footsteps—doing their “bit” for today’s society (Maclean & Harvey, 2020). To summarize, we argue,
Darwinian Founder Identity and Family Firm Philanthropy
In contrast to Missionary founders, Darwinian founders create their firms with the primary intention to generate profits and accumulate personal wealth (Fauchart & Gruber, 2011). Accordingly, these founders focus on establishing profitable, financially successful firms rather than attending to social or emotional matters (N. D. Pan et al., 2019). The Darwinian identity promotes a generic approach to venturing, unattached to a certain industry or community, and an appreciation for a professional “business school” approach to creating and running a firm (Sieger et al., 2016). As a result, Darwinian founders perceive other players in the industry as rivals and focus on achieving a competitive advantage (Fauchart & Gruber, 2011). Darwinian founders put themselves, and their firms, at the core of their considerations because they perceive themselves to be distinct from others and thus act primarily in a self-interested way by pursuing their own economic goals (Gruber & MacMillan, 2017). Accordingly, Darwinian founders seek to identify and explore the most profitable market segments. Moreover, Darwinian founders focus their attention on commercially successful products that satisfy important and already known customer needs. With economic profits in mind, Darwinian founders often choose mass production methods, relying on low-wage countries. Prior studies revealed that Darwinian founders score the lowest in terms of social inclusiveness among the proposed identity types (Fauchart & Gruber, 2011; Gruber & MacMillan, 2017; Sieger et al., 2016).
Having outlined the essence of the Darwinian identity, we hypothesize that this identity type of the firm founder will also influence the family firm’s later philanthropic engagement. Taking the perspective that philanthropy and social engagement in general is frequently carried out in an instrumental way (Chiu & Sharfman, 2011), one might assume that a Darwinian identity fosters philanthropic investment, as long as it increases the family’s social status in society or helps the business attract and retain talent to the firm (Feliu & Botero, 2016; Niehm et al., 2008). For instance, Darwinian-infused family firms might recognize the value of philanthropy because, in particular, talents valuing self-transcendence, who are motivated to improve environmental and societal conditions, tend to have a positive view of family firms (Hauswald et al., 2016) and hence might contribute to the family firm’s stock of human capital. Yet in this article, we argue that the predominant stance of a firm instilled by the founder’s Darwinian values and beliefs is that philanthropy—because it is, by definition, a non-profit investment (Maclean & Harvey, 2020)—detracts financial resources from the business. As such, we predict that family firm members, who remember well the Darwinian approach of their firm’s founder, might be more hesitant to invest in philanthropy, in particular when it refers to considering disadvantaged individuals or communities, which are not or only loosely connected to the firm. Unlike corporate social responsibility (CSR) activities which relate to the firm’s core operations and can thus be of strategic importance, and environmental improvements, which are often financially attractive for the firm due to cost reduction, philanthropy—which refers to giving back and making a difference to society beyond the firm and its owning family (cf. Maclean & Harvey, 2020)—does not provide direct and obvious financial benefits to the firm. As a result, we assume that—lacking the inherent focus on social inequalities and attending first and foremost to their economic self-interest—the Darwinian identity decreases philanthropy in the initial family firm stage. Along the lines argued above, we also assume that such an approach to philanthropy has a long-lasting effect on the family firm, also affecting the philanthropic engagement after the founder’s exit. The founder’s descendants who are knowledgeable about their ancestor’s values and business approach likely cherish her or him for the business acumen, the parsimony, and the entrepreneurial success. Given the stories they might have heard about their family business’s past, they will likely not connect “business” with “charitable actions.” As such, we assume that the Darwinian founder’s critical stance toward firm-level philanthropy will last in the respective family firms. Put formally,
Moderating Role of Transgenerational Control Intentions on Darwinian Founder Identity
In the context of family firms, transgenerational role intentions (TCI) often play a decisive role in family owners’ sense- and decision making (Zellweger et al., 2012). TCI reflects the goal to hand the firm over to subsequent generations, ensuring continued control over the firm by family members (Brinkerink & Bammens, 2018; Matzler et al., 2015; Miller et al., 2011). When pursuing TCI, family firm decision makers focus on their long-term family goals and perceive the firm as a vehicle to address the family’s needs over generations (Brinkerink & Bammens, 2018; Miller et al., 2011). Family-internal succession of top management positions in the firm forms a central part of the family’s TCI, as such a succession secures and cements the family’s long-term control over the firm (Klein et al., 2005). TCI is often referred to as the most distinguished feature of family firms, directing family members’ attention toward long-term family goals, most importantly the wish to ensure continued control over the firm, which ultimately affects strategic decisions on firm level (Chua et al., 1999; Hoffmann et al., 2019; Zellweger et al., 2012). Most notably, family owners pursuing TCI are particularly incentivized to invest in the firm’s favorable reputation (Zellweger et al., 2013) to enhance the attractiveness of succession for next-generation family members. The underlying rationale is that next-gen family members will more likely commit their future professional life to the family firm if it has a good reputation, which might spill over to the family members themselves.
However, members of different business families differ in the extent to which they pursue TCI: Whereas some families find intra-family succession rather undesirable as they do not want to constrain their kids’ future (professional) lives, for others it constitutes the raison d’être of the firm (Zellweger et al., 2013). The level of TCI is likely to impact the degree of family members’ social identification with the firm. Research has argued that family members generally tend to identify more strongly with their firm, compared to employees without such family connections, because they are more aware of their group membership, value it, and are emotionally invested in it (Deephouse & Jaskiewicz, 2013; Tajfel, 1982). Moreover, especially in cases of high levels of TCI, the firm constitutes a vital part of their personal life, enhancing the self-identification with the firm (Deephouse & Jaskiewicz, 2013; Dyer & Whetten, 2006; Zellweger et al., 2013), resulting in self-reinforcement: As a result of TCI, family members highly value the security that comes with owning the firm over generations and perceive this as an important benefit, which again fosters their social identification with the business (Deephouse & Jaskiewicz, 2013). Finally, if TCI is high, family members are likely to be emotionally invested in the firm and care for its long-term survival, enhancing the centrality of their social identity derived through family firm membership (Deephouse & Jaskiewicz, 2013; Gómez-Mejía et al., 2007; Zellweger et al., 2012). To the contrary, when TCI is low, family firm decision makers might perceive their business as merely a useful means to finance their lifestyle, leading them to opt for potentially selling the business at a later stage in their life rather than handing it over to the next generation (Dehlen et al., 2014).
Given the decisive yet divisive role of TCI for family firms, we explore its moderating role in the above-argued relationship. 4 Specifically, we argue that TCI weakens the effect of the imprinted Darwinian founder identity on family firm philanthropy. This is because engaging in philanthropy becomes strategically important when the family pursues TCI (Y. Pan et al., 2018), even if the self-interested Darwinian beliefs permeate the family firm. The reason is that a firm’s engagement in philanthropy has been proven to increase its reputation (Uhlaner et al., 2004). We thus argue that if TCI is high, philanthropy is more aligned with the Darwinian identity because it increases the self-interested motive to engage in philanthropy. In other words, even though the original founder identity would not encourage philanthropy, their high identification with the firm and desire to motivate their offspring to take over, will motivate decision-makers in firms with Darwinian founder identity and high levels of TCI to invest in philanthropy; the rationale is that such philanthropic investment will enhance firm reputation and hence make succession more attractive for the next generation, which fulfills the underlying needs of TCI. In the absence of TCI, however, family firms influenced by a Darwinian founder might still conclude that philanthropy is an expense that does not provide measurable benefits to the firm, as argued above in H3. However, if TCI is high, this might change as TCI shifts family members’ emphasis on family goals rather than firm goals, specifically securing the firm into the next generation.
Specifically, family owners who strive for transgenerational continuity need to convince their offspring to take a successor role. Presenting the family firm as a “good citizen” that helps reduce some of the most important problems of the world can help increase the attractiveness of family firm succession, as philanthropy generates positive external perceptions of the firm and its owning family, which can translate into reputational capital (Bingham et al., 2011; Schwass & Lief, 2008; Uhlaner et al., 2004). As such, transgenerational control intentions might weaken the effect of the founder’s Darwinian identity on philanthropy due to the instilled high level of social identification and the concern of family owners to present themselves and their firm in a favorable light. As such, we expect a self-interested, reputational incentive to engage in philanthropy when Darwinian founder values and beliefs coincide with TCI of family business owners, who strongly identify with the firm and who prioritize family goals over business goals. The family members might strategically rely on philanthropy to polish the firm-inside and firm-outside image of the family firm, and such a polished image is likely to enhance the next generation’s identification with the firm (cf. Berrone et al., 2012), increasing the attractiveness of a family-internal succession. To summarize, we argue,
Method
Sample and Statistical Procedure
To test the hypotheses, we relied on an international survey, conducted in partnership with a global professional services firm. The international focus was chosen to allow for identifying globally relevant findings, given that both founder importance and importance of philanthropy might depend on the institutional context (Feliu & Botero, 2016). The entire survey was dedicated to exploring family firm philanthropy. Data were collected through a telephone survey administered to family firm owners and managers. The following sampling criteria were applied: First, we focused on the 30 most influential countries in the world in terms of their economic strength. Second, to engage in a systematic data collection approach and avoid arbitrarily selecting companies, we identified the 60 most influential family firms in each country. Third, for operational reasons, we only considered companies for which we could attain key decision makers’ names and contact details. The final sample comprised key decision-makers in family firms operating in 21 countries, yielding 525 responses. For the purpose of this study, we filtered our sample to include only responses from key decision-makers of family firms who could recall or were aware of the values and goals of the firm founder. After excluding cases with missing observations for our dependent, control, or independent variables, the final regression model contained 237 responses. We applied ordinary least squares (OLS) regression to test our hypotheses.
Measures
Dependent Variable
To measure family firm philanthropy, we relied on the Multidimensional Corporate Stakeholder Responsibility Scale developed and validated by El Akremi and colleagues (2018), which is highly cited (e.g., Berrone et al., 2023; Matten & Moon, 2020; Onkila & Sarna, 2022). We focused on the community-oriented responsibility category, which corresponds to the definition of philanthropy as (financially) giving back and making a difference to society beyond the firm and its owning family on a non-profit basis (cf. Maclean & Harvey, 2020). The scale included seven items related to philanthropy, namely: “Our company invests in humanitarian projects in poor countries”; “Our company provides financial support for humanitarian causes and charities”; “Our company contributes to improving the well-being of populations in the areas where it operates by providing help for schools, sporting events, etc.”; “Our company invests in the health of populations of developing countries (e.g., vaccination)”; “Our company helps NGOs and similar associations such as UNICEF and the Red Cross”; “Our company gives financial assistance to the deprived in the areas where it operates”; and “Our company assists populations and local residents in case of natural disasters/accidents.” 5 Answers for each item range from 1 (strongly disagree) to 5 (strongly agree). Cronbach’s alpha reaches .84.
Independent Variables
To explore the founder identity, we relied on the scale developed by Sieger et al. (2016) and personal recollections of our survey participants. Specifically, we investigate the impact of a Darwinian founder identity and the effect of a Missionary founder identity (Sieger et al., 2016). The
Moderator Variables
For the first moderator variable, number of generations, we asked the respondents to indicate their numerical answer to the following question: “Which generation of family owners are you?” Answers ranged from 1 to 6. For the second moderator variable, TCI, we relied on a five-item scale developed from Zellweger et al. (2012). Example items include “We wish that the future president of the business will be a family member” and “We will never consider selling shares of the business outside our family.” 8 Answers for each item range from 1 (strongly disagree) to 5 (strongly agree). Cronbach’s alpha reaches .78.
Control Variables
We included additional individual-, family-, firm-, and region-level variables that might affect family firm philanthropy. On the
At the
Results
Descriptive Analysis
The correlation matrix and descriptive statistics for all variables included in our model are shown in Table 1.
Descriptives.
Overall, there are only low to medium correlations between the variables. Interestingly, the Missionary founder identity is positively correlated with the Darwinian founder identity in our sample of family firms, which we will evaluate in the discussion and future research section. Overall, we collected responses from the most influential family firms in each of the 21 countries. As a result, over 75% of the family firms in our sample have more than 500 employees, with 33% of our sampled family firms having more than 5,000 employees. 19.3% of the family firms in our final sample are still founder-controlled, 38.7% are in the second generation of family control, 29.8% are in their third generation, 7.9% are in their fourth generation, 2% are in their fifth generation, and 2.3% are in their sixth generation of family control.
Tests for Data Quality
Our dependent and independent variables were collected from the same key decision makers in family firms through a single survey, which could be a source of common method bias. To assess whether common method bias is a concern in our study. We conducted two common post hoc tests. First, we applied Harman’s (1967) single-factor test, as suggested by Podsakoff and Organ (1986). The first factor explained only 14.24% of the variance, indicating that common method bias is not a major problem in our study, as no single factor accounts for the majority of the total variance. Second, we follow prior research that uses marker variables, that is, theoretically unrelated variables (Lindell & Whitney, 2001). A strong and significant correlation between the key constructs of interest and the marker variable may indicate the presence of a common method bias (Malhotra et al., 2006; Tiwana, 2008). Inspired by this approach and adapting it to our study’s setting, we used the question “What is the geographical focus of your philanthropy?” (1: We prefer to support projects in our local community and 2: We prefer to support the most important causes, irrespective of location) to explore the potential problem of common method bias, as this variable might be subject to the same perception bias as our independent variables. However, although we theoretically expect and empirically find that this geographical variable correlates with respondents’ philanthropy overall (our dependent variable), it should theoretically not correlate with our independent variables, that is, Missionary and Darwinian founder identities, as well as other key constructs of our study, notably TCI. Indeed, we find low and non-significant correlations between these variables and the geographical focus of philanthropy. The risk of common method bias was further mitigated by including multiple control variables that are not or only moderately correlated (Siemsen et al., 2010). Moreover, research has shown that common method bias usually deflates nonlinear effects (Siemsen et al., 2010). Given that our study presents significant interaction effects, we conclude that common method bias should not be a serious concern in our study.
Finally, we tested for potential multicollinearity issues by calculating the variance inflation factor (VIF) and found that the factor for all variables in our model was below the common threshold of 10, indicating that multicollinearity is not a major concern. Moreover, the VIF of the independent and moderating variables did not exceed 1.63, providing further evidence that our study is not substantially affected by multicollinearity (Hair et al., 2006).
Regression Results
To test our hypotheses, we estimated an OLS regression with family firm philanthropy as the dependent variable. Table 2 shows the regression results. Model 1 in the regression only includes control variables. Subsequently, independent and moderator variables are added in Models 2-4.
OLS Regression on Family Firm Philanthropy.
Model 1 reveals that, in line with arguments and findings of the prior literature (Campopiano et al., 2019), being female (β = 0.113;
Interaction of Missionary Identity and Number of Generations and Its Effect on Family Firm Philanthropy.
Interaction of Darwinian Identity and TCI and Its Effect on Family Firm Philanthropy.
Post Hoc Tests
First, this study focuses on the Missionary founder identity and the Darwinian founder identity (Sieger et al., 2016), the two most extreme archetypes of founder identities. Surprisingly, we find that both the Missionary founder identity and the Darwinian identity increase family firm philanthropy, albeit for different reasons, as we argue in the discussion section. Given this surprising finding, we conducted a post hoc test that included the third founder identity type identified by prior research—Communitarian founder identity—in our model. Test 1 of Table 3 indicates that the Communitarian identity type has no significant effect on family firm philanthropy (β = 0.014;
Post Hoc Tests.
As a second post hoc test, we conducted the moderator analysis of Model 3 and Model 4 of our main analysis with the other, previously untheorized, founder identity type, respectively. We find (Table 3, Test 2), in line with our theoretical considerations, that the positive effect of the Darwinian founder identity does not change over generations (β = −0.039;
Discussion
Family firm philanthropy is an important phenomenon around the world that generates substantial practical interest and thus calls for additional rigorous academic insights (Bhatnagar et al., 2020; Campopiano et al., 2014). Relatedly, philanthropy scholars have stressed that research on the charitable giving of entrepreneurs and business families is still in its pre-paradigmatic, embryonic stage (Harvey et al., 2020). Contributing to the development of this important research field, our study applies an identity lens to study the philanthropic engagement of business families through their family firms. Specifically, we rely on the founder identity types developed in the entrepreneurship literature (Fauchart & Gruber, 2011) and explore their effects on family firm philanthropy. In line with our reasoning, we find that a Missionary founder identity enhances family firm philanthropy because it engraves the firm with social values, beliefs, and purpose. Contrary to our initial reasoning, we find that a Darwinian founder identity also increases family firm philanthropy. Making sense of this unexpected finding, we assume that Darwinians might see financial business benefits in engaging in philanthropy, or hope to increase their own, personal reputation through such engagement. As noted above, the literature on philanthropy has highlighted that investing in philanthropy has the potential to accrue financial benefits and hence might be driven by self-interest (e.g., Brammer & Millington, 2004; Jia et al., 2019). Accordingly, scholars have argued that providing to charitable causes might also help to increase sales (Feliu & Botero, 2016; File & Prince, 1998), boost firm performance (Fernando & Almeida, 2012; Fitzgerald et al., 2010), and bring financial returns for the firm (Lähdesmäki & Takala, 2012; Madden et al., 2006; Niehm et al., 2008). We assume that it is those expected benefits (rather than an identity based on altruism and societal impact) that make firms with Darwinian founders invest in philanthropy. Further research should hence avoid stereotyping founder identities and to anticipate that negatively associated identities might lead to beneficial outcomes and vice versa.
Interestingly, our correlation analysis also shows that the Missionary founder identity and the Darwinian founder identity are positively correlated. This correlation provides evidence for the theoretical assumption that philanthropy is often driven by both, concern for distant others and for oneself, and that these seemingly opposing incentives are not mutually exclusive (Harvey et al., 2020). Firms are likely to have a preference for either the Missionary, transformative approach to philanthropy, or the more conventional approach to giving, based on maintaining the status quo, as promoted by the Darwinian identity. However, despite this ideological preference, firms might engage in a mixture of transformative and conventional forms of philanthropy (Harvey et al., 2020), resulting in a correlation of these ideal identity types on the firm level. In fact, the common slogans “doing well by doing good,” or reversely “doing good by doing well” are testimony of the recent rise of hybrid identities trying to combine social and business goals that also permeate the field of philanthropy. As an implication of this finding, future research is advised to move away from studying founder types in isolation and to embrace the potentially hybrid character.
In a subsequent step, our study explored two important moderators that alter the effect of the founder identity types on philanthropy. First, we show that the positive impact of the Missionary identity on philanthropy increases over family generations. This finding provides evidence that the founder’s dedication to social causes will be cherished and idealized by later family generations (Bhatnagar et al., 2019). Over generations, the influence of the founder over the firm increases because the inheritor generations are particularly likely to enact the founder’s values and beliefs (cf. De Massis et al., 2016; Erdogan et al., 2020; Jaskiewicz et al., 2015) by engaging in family firm philanthropy.
Second, and contrary to our theorizing, some of our findings indicate that TCI might dampen the positive effect of the Darwinian identity on family firm philanthropy. Interestingly, although TCI is positively correlated with family firm philanthropy, our moderator analyses indicate that it might alleviate the positive effect of a Darwinian identity on family firm philanthropy. Although additional research is required since this moderation is not consistently supported by all our models, this finding contributes to previous ambivalent scholarly findings on TCI (Dorsch et al., 2023; Hoffmann et al., 2019). On the one hand, TCI, because of its long-term focus, might foster family firms’ societal and environmental engagement (e.g., Dou et al., 2019). On the other hand, family members pursuing TCI might emphasize socioemotional family considerations at the expense of the business logic (Miller et al., 2011) and thus might focus predominantly on the future needs of family members to the detriment of the firm and its external stakeholders (Kellermanns et al., 2012). Whereas philanthropy is beneficial for family members who seek to keep a favorable reputation in society (Berrone et al., 2012; Ge & Micelotta, 2019), as evidenced by the positive main effect in our study, TCI might induce family members to promote each other rather than distant others, notably the business and its stakeholders. Future research is necessary to better understand the conditions under which TCI turns (or does not turn) out beneficial for the family members, the firm, and its stakeholders.
Overall, our study’s insights contribute to three important streams of the literature.
Contribution to the Family Firm Literature
First, our study contributes to the family business literature. To the best of our knowledge, our study is the first to test whether the effects of founder values and beliefs on firm decisions become stronger or weaker over family generations. In line with the identity literature, our results show that the founder effect gets stronger over time as the founder is increasingly cherished and a source of self-identification over generations. However, we argue that this is only the case if the values and beliefs of the founder are worthwhile enacting (Suddaby & Jaskiewicz, 2020) because they are, as in the Missionary case, a source of pride and honor for the family (cf. Bhatnagar et al., 2019, 2020). In line with this reasoning, we do not find a significant moderation effect of family generations in case the Darwinian founder identity is pronounced because a Darwinian founder identity is less likely to increase its influence over generations, at least not with regard to socially-oriented projects. This finding has important implications for further studies on family firm theory, especially on the enduring effect of, for example, legacy in family firms. It points out that family firm theorizing on such temporal development needs to differentiate the “valence” of what was imprinted.
Our findings are also important because we are able to show that the founder is not only important for innovation (Erdogan et al., 2020; Kammerlander et al., 2015) and entrepreneurship (Jaskiewicz et al., 2015) in later-stage family firms, as argued in previous studies, but also shapes philanthropy. By shedding light on the role of the founder, we continue the initial dialogue on the role of individual-level factors for family firm philanthropy. As such, we add to existing studies researching the role of female directors (Campopiano et al., 2019) and family versus non-family managers (Campopiano et al., 2014) on family firm philanthropy by revealing another relevant antecedent. Our findings imply that further family firm philanthropy studies should control for the role of the founder as an important antecedent.
Moreover, our surprising and somewhat tentative finding about the negative moderation effect of TCI holds intriguing insights for the family business research community. On the one hand, TCI is positively correlated to family firm philanthropy, which is in line with the arguments brought forward in our hypothesis section. Due to the long-term focus, succession intention, and reputation concerns induced by TCI, family members might be particularly motivated to pursue philanthropy. On the other hand, our data indicates that TCI dampens the positive effect of the Darwinian identity on family firm philanthropy. Our findings thus also add to previous research highlighting TCI’s potential “dark side” (Gómez-Mejía et al., 2007, 2010; Hoffmann et al., 2019). Specifically, TCI not only potentially harms business outcomes, such as growth and performance, as argued in the prior literature (Gómez-Mejía et al., 2010; Hoffmann et al., 2019), but our study also provides initial insights into its ambiguous societal effects, which warrant future investigation. Our results indicate that family members pursuing TCI might overly focus on the needs of future family members, neglecting the current business and its societal stakeholders (Kellermanns et al., 2012). As a result, TCI in firms influenced by a Darwinian founder might reduce the philanthropic engagement of family firms. These findings indicate that future TCI research needs to take a nuanced stance toward the specific conditions under which TCI does (or does not) result in beneficial outcomes.
Our results also highlight that it is important to move beyond simply assessing the presence of family ownership and involvement when studying outcomes such as family firm philanthropy (Mariani et al., 2023) but instead highlight the degree of the family’s control intentions, which largely differ from one family firm to the next. Doing so would speak to recent scholarly arguments that family firms can act as civic wealth creator, if they feel connected and embedded in a community that is larger than the owning family itself (Lumpkin & Bacq, 2022). We show that firms whose founders are characterized by a Missionary identity and thus carry a civic wealth creation mindset are less at risk of being negatively affected by TCI than those with a Darwinian identity when engaging in philanthropy.
Contribution to the Founder Identity Literature
Our study also contributes to the founder identity literature (Fauchart & Gruber, 2011; Gruber & MacMillan, 2017; N. D. Pan et al., 2019; Sieger et al., 2016). To the best of our knowledge, this study is the first to test the imprinting assumption of this literature by exploring the lasting effects of founder identities on the decision-making of large, multigenerational firms. The previous literature has drawn on the identity literature to explain the imprinting effect of family firms versus lone founder firms. This research has argued that different identities, deriving from the nature of their founding, influence strategic decisions in established firms in different ways (Cannella et al., 2015). Yet, it remains unclear how the different identity types of the founder beyond the “family versus lone founder” context matter for the firm’s decision-making. We first differentiate the different founder identity types and assess their effects on family firm philanthropy. We then account for the family context by relying on TCI to explore the extent of importance placed on family control. This way, we are able to shed light on both, the individual effect of founder identity, as well as its interaction with family-related considerations. Our findings imply that future studies should not only control for founder identities but also theorize on, and empirically test, their interactions with industry-, family- and firm-related factors.
Moreover, the founder identities proposed by Fauchart and Gruber (2011) intend to generate an extended view on entrepreneurship—one that goes beyond a purely economic view of entrepreneurs and instead recognizes that “social aspects of a founder’s self-concept are likely to be of importance” (p. 935). However, despite this important theoretical development, we lack insights into the social outcomes of founder identities (Ko & Kim, 2020). Relatedly, scholars have argued that the founder identity types constitute a promising angle to study social entrepreneurship by providing a nuanced understanding of different types of social entrepreneurs, who might be motivated by benefiting themselves, known others, or distant others (N. D. Pan et al., 2019). Recently, researchers have also begun to explore how founder identity types might be influenced by grand challenges such as refugee events (Hsueh et al., 2023). Our study extends this emerging dialogue on founder identity types in the social context by exploring how founder identities relate to philanthropy. Our findings reveal a need for further research focusing on further economic and non-economic implications of founder identities at the owner-, firm-, and regional level.
Contribution to the Philanthropy Literature
Finally, we advance the recent literature on philanthropy (Cruz et al., 2024; Du, 2015; Giacomin & Jones, 2021; Jin & Hu, 2024; Maclean et al., 2015). Specifically, we continue applying identity theory in this literature stream by exploring the effect of
Extending our research, we predict that a Darwinian founder is more likely to be motivated by conventional forms of philanthropy because he or she engages in philanthropy mainly due to instrumental, business motives rather than ideological, transformational aspirations. Those Darwinian founders might hence be pre-destined to act as “pillars of society philanthropist” focusing on supporting existing institutions and organizations (Maclean & Harvey, 2020). Based on the Darwinian self-concept, such philanthropic efforts are likely undertaken in a manner that adheres to social expectations while maintaining the status quo, rather than to initiate radical change by tackling social inequity (Maclean et al., 2015; Maclean & Harvey, 2020). We have started to explore the link between founder identities and philanthropy by showing that both, the Missionary founder and the Darwinian founder foster philanthropy. Our results imply that theorizing should not treat Missionary and Darwinian founder industries as universally beneficial or detrimental for tackling social and environmental issues, yet needs to take a nuanced perspective that considers boundary conditions. Future research could specifically test the effect of founder identity types on different approaches to philanthropy.
Moreover, we contribute to the philanthropy literature by exploring the wider context of entrepreneurs, many of which having accumulated and invested their substantial wealth in family enterprises. Specifically, our insights reveal that business-owning families might be pursuing transgenerational control goals, which influences their evaluation of philanthropy. Our results provide initial evidence that those family-related goals might lower the positive effects of the founders’ identity on philanthropy. Interestingly, this might be particularly the case if the founder identity is Darwinian. In this case, family interests might outweigh business incentives to engage in philanthropy. In comparison, the negative moderation of TCI is only marginally significant for the Missionary founder. As such, our study indicates that the positive effect of the Missionary founder identity on philanthropy is less at risk of being diluted by other, sometimes opposing family considerations. With regard to philanthropy theorizing, our findings suggest that some antecedents of philanthropy (such as a Missionary founder identity) might be more “sticky” and robust over time than others, requiring further research on the long-term effects of philanthropy drivers.
Managerial Implications
Our study suggests that founder identities and the associated values can have a powerful impact on the firm’s culture and decision-making. Managers of family firms should actively draw on the imprinted founder identity to align the firm’s mission statement and code of conduct accordingly. Doing so will enhance the connection between the firm’s employees and the firm’s founder, benefiting the corporate culture and ultimately reinforcing the positive effect of the founder’s identity on firm outcomes.
Moreover, managers should be aware that philanthropy could indeed be motivated by instrumental reasons, such as increasing reputation and legitimacy, which is in line with a Darwinian founder identity. However, philanthropy may be vulnerable to being diluted by competing goals, such as the family’s transgenerational control intentions, if it is not aligned with deeper, other-oriented values. Hence, building a stronger normative commitment for philanthropy based on a Missionary identity might help to establish a more long-term and ambitious philanthropic engagement.
Limitations
Our study is not free of limitations, which open interesting avenues for future research. First, our insights are based on survey data. It would be valuable to complement and verify our findings by relying on alternative data and methods, such as experiments, qualitative interview data, or text analysis. Moreover, we relied on responses gathered from an international sample of family decision makers. Interestingly, we find that family firms in North America and in Asia reported a significantly higher engagement in philanthropy when compared with other regions. This is an interesting finding because the economic and cultural contexts of these two regions are very different from one another and are likely to promote philanthropy for different reasons. Research on philanthropy has predominantly relied on the context of the United States. This is because the economic and political systems in North America have fostered a long-standing philanthropic tradition (Feliu & Botero, 2016; Rey-Garcia & Puig-Raposo, 2013). Thus, family firms might feel compelled to engage in philanthropy to comply with existing norms. Contrarily, family firm philanthropy is a more recent scholarly inquiry in Asia in which family firms have been found to engage in philanthropy to increase their legitimacy (Dou et al., 2014; Du, 2015; Ge & Micelotta, 2019; Zhang et al., 2012). In addition to understanding the differences and similarities of family firm philanthropy in North America and Asia, it is also worthwhile to focus further research on family firm philanthropy in other geographical regions. Important questions are: How do family firm owners, and society, perceive philanthropy in these areas? How can philanthropy be encouraged in these regions? What institutional factors might incentivize them? Moreover, although the international nature of our survey is a key strength (Feliu & Botero, 2016), we recommend refining our empirical model on data deriving from the same region, as regional differences even within one country might make a difference on family firm philanthropy that cannot be accounted for in our international sample.
Moreover, we rely on respondents’ memories of the founder. This is in line with our research question as we are measuring the respondents’ perception of the founder’s identity, which ultimately promotes charitable participation, regardless of historical reality. Using a survey design rather than a qualitative study enriches the methodological approaches within the literature on founder legacies, which primarily applied qualitative approaches (Radu-Lefebvre et al., 2024). Nevertheless, future studies could draw on rich qualitative insights, notably on archival data, to explore the effect of Missionary and Darwinian founder identities further. Doing so would address issues of recall bias, family mythology, and social desirability.
Next, our results indicate that TCI has an ambivalent effect on societal stakeholders unrelated to the family. Even though it is overall positively correlated to family firm philanthropy, it seems to weaken the positive effect of the Darwinian founder identity on philanthropy. We recommend future studies to dig deeper into this unexpected and tentative, yet important finding of our research and scrutinize under which conditions and why such negative effects occur. For instance, TCI may amplify founder identity effects under certain governance or resource conditions but dampen them under others.
Next, our study reveals a positive correlation between the Missionary and Darwinian founder identities. Future research could explore this correlation further by focusing on the prevalence and effects of such hybrid founder identities combining a social and business logic (Aust et al., 2024; Fauchart & Gruber, 2011; Sieger et al., 2016).
Moreover, our study primarily relies on a global sample of primarily large family firms. These firms possess the necessary means to engage substantially in philanthropy. Moreover, they are likely sufficiently professionalized to have structures in place that allow them to diligently select and also carefully assess the impact of their philanthropic activities. While firms of all sizes can engage in philanthropy, the donations are likely more substantial from larger firms, justifying our sampling approach. Moreover, we expect that founder identity might be particularly relevant in large firms, given the typically high achievements of such founders. Yet this focus also comes with some drawbacks. For example, one could argue that our study suffers from survivability bias. Moreover, smaller family firms might substantially differ in how they engage in philanthropy. For instance, they might prefer more local or regional projects and become more personally engaged as compared to large companies. Hence, smaller companies might be particularly driven by increasing their employer branding through local philanthropy. Moreover, founder myths might be different in smaller firms compared to larger firms. Whereas in larger firms, founder myths might relate to the successful legacy of the creator of the firm, in smaller firms, myths might circle less around commercial success but the founder’s community engagement and non-financial impact. Future research could complement our study by sampling smaller family firms. Finally, we restricted the scope of our analysis to philanthropic engagement at the family firm level. In future studies, it would be interesting to scrutinize the interplay of philanthropy at the firm level, at the family/individual level through donations, and at the family foundation level.
Conclusion
Family firm philanthropy is an important response to pressing social issues in our societies, yet the phenomenon remains under-conceptualized and under-researched. Our study adds to initial insights on the role of identity for family firm philanthropy by exploring the lasting effects of founder identity types. We reveal that both Missionary and Darwinian founder identities promote family firm philanthropy. However, while the effect of the Missionary identity gets stronger over generations, the effect of the Darwinian identity is likely to be weakened by the family’s transgenerational control intentions. As such, our research provides initial insights into the drivers of family firm philanthropy and opens up a lacuna of promising research avenues.
Footnotes
Appendix
Items of Dependent, Independent and Moderation Variables.
| Variables | Measurements | Items |
|---|---|---|
| Dependent variable | Family firm philanthropy |
Mean value of the following items: |
| Independent variables | Missionary founder identity |
Mean value of the following items: |
| Darwinian founder identity |
Mean value of the following items: |
|
| Moderation variables | Number of generations | Answer to the question: |
| TCI (Transgenerational Control Intentions) |
Mean of the following: |
Acknowledgements
We gratefully acknowledge helpful comments from two anonymous reviewers of the IFERA conference 2021 on a previous version of this manuscript.
Declaration of Conflicting Interests
The authors declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The authors received no financial support for the research, authorship, and/or publication of this article.
Compliance with Ethical Standards
The authors have no relevant financial or non-financial interests to disclose. To test the manuscript’s hypotheses, the authors relied on an international survey, conducted in partnership with Ernst and Young, a global, professional services firm. The research was conducted following all the ethical standards of the University St. Gallen (the first author’s affiliation at the time of data collection). The procedures used in this study adhere to the tenets of the Declaration of Helsinki.
