Blending minds, balancing goals TMT heterogeneity and sustainable-innovation in family firms

Family firms often prioritize profitability and growth, but balancing these with environmental sustainability is challenging. While TMT heterogeneity shapes various performance outcomes, its role in addressing the profitability–environmental sustainability dilemma in family firms remains unclear. Building on the upper echelons theory, we investigate how TMT heterogeneity drives the simultaneous pursuit of financial and environmental performance, which we refer to as hybrid financial–environmental performance, through sustainable-innovation practices. Additionally, we examine how family-firm governance mechanisms influence these relationships. Analyzing data from two matched samples of CEOs and senior production managers of Australian family firms, we find not only that TMT heterogeneity enhances the adoption of sustainable-innovation practices and leads to hybrid financial–environmental performance but also that the strength of this relationship is contingent on family-member involvement in the TMT and participative decision-making with subordinates. These insights advance our understanding of how family firms balance financial success and environmental responsibility.

© 2025 The Author(s). Published with license by Taylor & Francis Group, LLC.

This is an Open Access article distributed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivatives License (http://creativecommons.org/licenses/by-nc-nd/4.0/), which permits non-commercial re-use, distribution, and reproduction in any medium, provided the original work is properly cited, and is not altered, transformed, or built upon in any way. The terms on which this article has been published allow the posting of the Accepted Manuscript in a repository by the author(s) or with their consent.