The Influence of the CF-NFE Trust Relationship on the Sustainable Development Performance of Family Firms: A Mediation Model Based on Stewardship Behaviour

Abstract

Sustainable development is a crucial way not only of promoting the economic success of family businesses but also of ensuring their long-term stability and prosperity. As a central element of relational governance, trust plays a vital role in efforts to align the interests of principals with those of agents, and this factor has received significant attention in the context of family businesses. Stewardship theory further posits that granting agents sufficient authority and trust can effectively encourage them to engage in stewardship behaviours that are more in line with the overall interests of the organization, thus providing a new theoretical perspective on agency problems as well as a practical approach that can be used to address these issues. In traditional Chinese culture, family businesses benefit from deep-seated family values and unique relational networks, which confer on them a distinctive governance logic and a system rooted in foundational trust. On the basis of survey data collected from 281 nonfamily chief executive officers (CEOs) in China, this study empirically examines the impact of trust between controlling families (CFs) and non-family CEO (NFEs) on the sustainable development performance of family businesses. The findings of this research are as follows: (1) Trust between CFs and NFEs is developed through the exchange of economic benefits, the integration of social emotions, and the establishment of institutional structures, thus leading to three forms of trust: calculative trust, relational trust, and institutional trust. Calculative trust can inhibit the sustainable development performance of family businesses, whereas relational trust and institutional trust can enhance such performance. (2) Calculative trust reduces stewardship behaviour on the part of NFEs, thereby weakening the sustainable development performance of family businesses. Conversely, both relational trust and institutional trust can promote stewardship behaviour on the part of NFEs, thereby strengthening the firm’s sustainable development performance. This study addresses gaps in previous research on this topic and offers valuable insights that businesses can use to take advantage of trust to improve their sustainable development outcomes.