Family ownership and the export performance of SMEs: the moderating role of financial constraints and flexibility

Abstract

PurposeThis article investigates the relationship between family ownership and export performance in the context of SMEs while also considering the moderating role of the financial dimension and, in particular, financial constraints and financial flexibility.Design/methodology/approachWe select a sample of 1,132 Italian SMEs to examine through an econometric analysis the role and impact of family ownership and the financial moderating variables being used on their export performance.FindingsThe results indicate that there is a U-shaped relationship between family ownership and export performance: the highest levels of export performance correspond to the lowest and highest family ownership levels, whereas when a mixture of family and nonfamily ownership exists, the performance suffers because of “conflicting voices” dominating strategic visions and approaches, harming the firm's export commitment. Moreover, the findings show that lower financial constraints and/or stronger financial flexibility improve the relationship between family ownership and export performance.Research limitations/implicationsOur findings show that the ownership structure is important for export performance; in particular, firms should avoid a mixture between family and nonfamily ownership because it is detrimental to export performance. Moreover, Italian SMEs need to develop sources of financing other than the banking channel, and policy makers should favour this process to overcome financial constraint problems and improve financial flexibility. Limitations concern the use of other econometric approaches and measurement variables to further investigate the connection between family ownership and export performance.Originality/valueThe present study enhances the comprehension of the complex relationship between family ownership and export performance by documenting the relevance of the level of family ownership and considering the moderating role of financial constraints and flexibility.

Financial performance and bankruptcy concerns of SMEs in their export decision

“…This is because by analyzing SMEs in Ghana, Adu-Gyamfi and Korneliussen (2013) confirms the fact that SMEs having positive self-evaluation regarding their performance more intensively perceive export obstacles. On the other hand, the results of this paper regarding firm performance and cultural-linguistic differences contradict with the studies of Westhead et al (2001), Lukason and Vissak (2016), Pascucci et al (2021) and Bianchi et al (2018) since these researchers prove the opposing results and support the positive influences of firm performance on less intensive perceptions of export barriers by SMEs and their exporting activities. For instance, Lukason and Vissak (2016) analyze some French SMEs and confirm the fact that SMEs having better financial performance face with reduced export processes including cultural differences.…”

“…Therefore, having less healthy financial conditions has been a major constraint for SMEs to do exporting activities, since it negatively influences their export decisions and probability to export (Rashid et al, 2021). Since export includes many expenses for SMEs, including sunk cost (Pascucci et al, 2021), fixed costs (Pietrovito & Pozzolo, 2021), and transport cost (Bianchi et al, 2018), firms having lower performance levels might perceive the export cost more intensively comparing to businesses having healthier financial conditions. For instance, by analyzing Brazilian firms, Da Silva and da Rocha (2001) express that external obstacles of exporting such as transportation and insurance costs are more intensively perceived by those firms.…”

“…Similarly, Pangarkar (2008) investigates SMEs in Singapore and confirms the fact that when SMEs negatively evaluate their performance, they more intensively perceive export costs including coordination and communication costs. Pascucci et al (2021) examine 1,132 Italian SMEs and declare the fact that SMEs having better financial performance lower export barriers including sunk costs.…”

Family Ownership and the Export Performance of SMEs: The Mediating Role of Innovation Capabilities

“…If the past time, the SMEs performance was focused on the local dimension, then the internationalization will be push them the realize the export performance (Singh & Mahmood, 2014). Empirically, the role of SMEs ownership in the internationalization context has become a major theme that has been investigated over the last 20 years (Pascucci et al, 2022;Zahoor et al, 2022). However, some of the explanations has been create a gaps that can be explored further, especially when using export performance parameters in assessing the impact of family ownership and innovation.…”

“…However, some of the explanations has been create a gaps that can be explored further, especially when using export performance parameters in assessing the impact of family ownership and innovation. First, empirical studies that investigating the relationship between family ownership and export performance has a various and unconvincing findings (Pascucci et al, 2022). In addition, very few authors have been explored this relationship in the context of SMEs.…”