Corporate governance, CSR mediation, and firm performance in family firms

Abstract

This study examines whether corporate governance (CG) improves firm performance (FP) directly and indirectly through corporate social responsibility (CSR) in Indonesian family firms, and whether the pattern differs between family-CEO-led and non-family-CEO-led firms. The study analyzes 431 firm-year observations from 114 family firms listed on the Indonesia Stock Exchange during 2021–2025, using purposive sampling after excluding z-score outliers. Panel regression is used to test the direct relationships, while a three-step mediation procedure and a bootstrapped indirect-effect test assess the mediating role of CSR. The results show that CG has a positive and statistically significant effect on FP and CSR. CSR also has a positive effect on FP and partially mediates the relationship between CG and FP. The mediation effect is stronger in family-CEO-led firms, where the direct effect of CG on FP becomes weaker after CSR is included. Family-CEO-led firms also record higher average firm performance than firms managed by non-family CEOs. These findings indicate that CSR is an important mechanism through which governance quality contributes to performance in family firms. The study contributes to the family business literature by integrating governance, sustainability, and management type, and offers practical implications for regulators, boards, and family owners in emerging markets.