Abstract

We investigate the relationship between family-related factors in family owned businesses and the level of business legality, which is a key dimension of corporate social responsibility, surprisingly neglected despite its business and social relevance. By adopting the ability and willingness perspective, and merging it with signaling theory, we consider family involvement in management and generational stage as key antecedents of legal behavior in family owned businesses. We utilize an official legality rating recently developed by the Italian Competition Authority to build a unique dataset of 161 Italian family owned SMEs. Results from a regression analysis confirm our hypotheses: business legality increases with higher levels of family involvement in management, and at later generational stages.