Sustainable Talk, Digital Walk: ESG Dynamics and Stakeholder Engagement in Family Firms

How do family firms strategically communicate sustainability, and is such communication associated with digital stakeholder engagement? Anchored in the socioemotional wealth (SEW) perspective and informed by both signaling theory and stakeholder theory, this study investigates the association between firm‐level ESG discourse and digital stakeholder engagement outcomes. We focus on family‐owned firms, which face distinctive legitimacy challenges arising from the dual pursuit of socioemotional endowments and market performance, and which are increasingly expected to articulate purpose‐driven narratives aligned with societal expectations. Leveraging a global dataset of 807 family firms sourced from Crunchbase, we employ ESG‐BERT, a domain‐specific transformer model, to extract a continuous ESG commitment score from firm‐authored narrative descriptions. The dependent variable, a digital stakeholder engagement index (DSEI), is constructed through principal component analysis of behavioral web metrics that capture the depth and quality of online stakeholder interaction. Results from fixed‐effects regression models reveal a positive and significant association between ESG communication and digital engagement. Quantile regression analyses indicate that this relationship is weak among firms with the lowest digital engagement and becomes substantively stronger at the median and upper quantiles of the engagement distribution, suggesting conditional heterogeneity. Subgroup tests show that the association is stronger among firms in high‐technology sectors, OECD economies, and, contrary to our initial expectation, lower‐revenue firms, a pattern we interpret as a legitimacy‐catch‐up strategy. These findings are robust to alternative specifications, including region‐level fixed effects and generalized estimating equations (GEE). By integrating natural language processing with digital stakeholder analytics, this study proposes a digital legitimacy loop in family firms as an integrative framing device and empirically tests its observable components: SEW motives are expected to raise the intensity of ESG signaling, and stakeholder engagement is expected, in turn, to reinforce the returns to such signaling. Given the cross‐sectional design, all findings are interpreted as conditional associations rather than causal effects.