Balancing Legacy and Progress: Environmental and Social Sustainability Practices in European Union Family Firms

ABSTRACT This study aimed to evaluate the implementation of environmental and social sustainability measures by family businesses in the European Union and examine associations between these practices and company‐specific characteristics. The research analyzed a sample of 2523 family businesses from the 27 European Union member states. The findings reveal significant variations in the adoption of environmental and social sustainability practices across countries and businesses. Using a multilevel latent class model, four distinct classes of family businesses were identified: advanced implementers, non‐implementers, pro‐social implementers, and pro‐environmental implementers. In addition, three groups of countries with similar distributions of family business profiles were identified. The study underscores the heterogeneity of environmental and social sustainability practices among European family firms, revealing four distinct firm‐level classes' adoption profiles and three country‐level latent classes. Smaller businesses (micro entities), older firms (founded before 2000), and those with annual turnovers of around one million euros were more frequently associated with higher levels of adoption of social and environmental sustainability measures. By constructing multilevel models, the research highlights heterogeneity in the adoption patterns of sustainability practices within and between countries without attributing these differences to specific national or institutional factors. The conclusions further emphasize that EU family businesses exhibit heterogeneous patterns of environmental and social practices, with adoption varying across firm‐level and country‐level profiles and no consistent sequences in practice implementation; social measures (e.g., employee conditions) are more prevalent than environmental ones. The observed patterns are discussed in relation to firm characteristics and resource availability, while recognizing that explanatory mechanisms are not directly tested in this study. These findings contribute to advancing knowledge on family businesses' roles in fostering environmental and social sustainability in the European context by providing an exploratory, descriptive, and multilevel mapping of sustainability practice profiles. Socioemotional wealth, stakeholder theory, and dynamic capabilities are used as interpretive lenses to discuss the findings rather than as empirically tested mechanisms, given the cross‐sectional and observational nature of the data. The study also offers practical implications, suggesting that policy and managerial approaches may benefit from considering cross‐country and firm‐level heterogeneity when promoting sustainability adoption.