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Environmental Innovation Investment Decisions
Prior research suggests that family firms are more likely to engage in environment-friendly practices. However, the source of this difference is less clear. The primary objective of this experimental study is to investigate how environmental innovation tradeoffs are simultaneously evaluated within family and nonfamily firms based on their level of engagement with government and industry stakeholders. After analyzing 1,936 business owner decisions, the results indicate that family firms leverage investments in environment-friendly innovations to maintain strong government relationships as part of a regulatory oversight strategy and to avoid reputation threats. This research contributes to the development of a more comprehensive theoretical synthesis among the fields of CSR, family business, and stakeholder theory, while also laying the groundwork for further empirical exploration. Theory and practice implications are discussed.