Corporate Political Activity and Sensitivity to Social Attacks: The Case of Family-Managed Firms

Abstract

Family-managed firms take actions to protect their reputations. We theorize that one such action involves avoiding corporate political activity (CPA) that expose firms to social attack, especially when also invested in corporate social responsibility. Because large firms are frequent targets for social attack, the same sensitivity that encourages most family managers to avoid CPA encourages it among the largest as a buffer. Supportive analysis of Standard and Poor’s 500 firms shows that family-managed firms spend, on average, 86% less on CPA, even less when invested in substantive corporate social responsibility. The largest invest as much or more in CPA as nonfamily peers.