Family Involvement,Internal Control And Corporate Social Responsibility

Looking back on the economic and social development of China's Reform and Opening over the past 40 years,the establishment and improvement of China's socialist market economic system is largely attributed to the development of private enterprises.Numerous studies have shown that the vast majority of private enterprises take the form of family-owned and family members involved in corporate management.Family business is also an indispensable force in China's marketization process.From the perspective of the development of family firms that have achieved remarkable results,the healthy development depends to a large extent on the coordinated development of family management and great corporate social responsibility performance.With the advancement of the pace of building a well-off society in an all-round way,the public's attention to corporate social responsibility is getting higher and higher.The constant emergence of incidents such as food safety,environmental pollution,and protection of consumer rights has revealed that the contradiction between stakeholders and corporate entities has intensified.As a strategic management method,corporate social responsibility is easily influenced by the business philosophy of the company and the internal control system.The international COSO report and the domestic internal control regulations also set a new boundary for the scope of internal control,extending to non-financial reports,and making demands for corporate social responsibility.Therefore,this paper studies the relationship between internal control,family involvement and corporate social responsibility in the context of family business.As a special system based on blood,the family has a special system with strong emotional characteristics.The enterprise organization constructed by family and involved in business management has certain speciality and complexity.What is special about family businesses is that families and businesses are integrated into one,and family members serve as corporate executives.In family businesses,the main body of decision-making for internal control and corporate social responsibility is corporate executives,that is,family members.The internal corporate governance structure and the external responsibility of the company reflect the strong will of the family members.The theory of SEW shows that family involvement in enterprises will produce family-specific social emotional wealth,that is,the non-economic goals pursued by the family in addition to economic benefits.At present,in the academic research on family firm,the definition of family firm is relatively vague.Research methods often use survey research or case analysis methods,and the scope of research has certain limitations.The research content of family business is mostly concentrated on the family level and enterprise level of family business: the family level mainly includes the family's power distribution,family inheritance and descendant succession;the enterprise level mainly focuses on the family's corporate value,governance structure and agency problems.Research on family business internal control and corporate social responsibility is still relatively vacant,and there are still differences between the family's impact on corporate governance.Based on the previous research experience of the predecessors,this paper makes an in-depth analysis of internal control,family involvement and corporate social responsibility in the context of family business.On the basis of theoretical analysis,the author empirically analyzes the impact of internal control on corporate social responsibility,the impact of family involvement on internal control,and the degree of family involvement on the relationship between internal control and corporate social responsibility.Through empirical research,this paper finds:(1)In the family business,the quality of internal control has a significant role in promoting the fulfillment of corporate social responsibility,which is consistent with the research results of the existing full-type enterprises.(2)The degree of family involvement has a positive effect on the quality of internal control,breaking the traditional negative evaluation of the “family” system.With the increase in the shareholding ratio of family members and the proportion of family members,the quality of internal control of enterprises has also been significantly improved.At the same time,when family members enjoy external reputation,it also promotes the improvement of internal control quality of family businesses;(3)The degree of family involvement has a regulatory effect on the positive relationship between internal control and corporate social responsibility.This is also the main research conclusion of this paper.The study found that when the family maintains a high shareholding ratio or a high proportion of employment,on the one hand,the family's internal ability in the enterprise is enhanced,and the family can form a strong family network within the enterprise to obtain sufficient resources and capabilities.The improvement of the internal control quality of the family business also brings more internal resources to the company,thus accumulating enough social and emotional wealth inside.On the other hand,when the family obtains sufficient social emotional wealth,it will reduce the cost of fulfilling corporate social responsibility and reduce the external loss of social emotional wealth.Therefore,on the basis of resource dependence theory,the family will reduce the investment in external resources and capabilities,and reduce the strategic choice of external corporate social responsibility,which will have a negative impact on the performance of corporate social responsibility.