Enhancing innovation through ESG practices: the superior impact on family businesses

Purpose: This work contributes to the debate on the link between environmental, social and governance (ESG) criteria and firm innovation, incorporating ownership structure as a moderating variable. Design/methodology/approach: This research uses ordinary least squares (OLS) regression to analyse the impact of ESG criteria on innovation, considering firm ownership as a catalyst that strengthens the effect of environmental and social practices on innovative performance. Findings: Family-owned firms, with their unique characteristics like long-term orientation and commitment to family values, strengthen the relationship between environmental and social practices and innovation performance. This suggests that such firms are better positioned to leverage their corporate social responsibility (CSR) commitments and activities. Practical implications: The findings offer valuable insights for decision-making in organizations, particularly family firms focused on innovation and sustainability. The research shows that investing in sustainability practices not only ensures ESG compliance but also significantly fosters innovation. Originality/value: This study contributes to the debate regarding the relationship between ESG criteria and firm innovative performance. It highlights how the implementation of ESG practices influences innovation, and particularly how firm ownership further enhances the relationship between environmental and social practices and firm innovative performance.