The intersection of heritage and sustainability: succession and ESG performance of family firms

Abstract For family firms, ESG represents a critical strategy to address the global goals of carbon neutrality and sustainable development, and it is central to their long-term value creation and the pursuit of high-quality growth. This study explores the intersection of heritage and sustainability by examining the impact of succession on the ESG performance of family firms. Utilizing ESG rating data from CNRDS (Chinese Research Data Services Platform), we empirically analyze the link between family firms' succession and their ESG ratings across a dataset of Chinese listed family firms spanning from 2008 to 2021. Our findings indicate that family firms undergoing succession exhibit enhanced ESG performance. Notably, a higher count of second-generation executives during succession correlates with better ESG outcomes. Additionally, we discover that female heirs, with distinct gender characteristics, positively influence ESG performance. Furthermore, family firms identified as key environmental monitoring units and certified under environmental management systems demonstrate superior ESG ratings, especially under intense market competition. This research offers valuable insights for advancing ESG integration at the corporate level, thereby supporting high-quality sustainable development.