The pursuit of international opportunities in family firms: Generational differences and the role of knowledge‐based resources

Abstract

Research Summary: We argue that willingness (attitude toward risk, return, and socioemotional wealth), ability (extent of control), and resource availability influence the internationalization of family firms. We hypothesize that the internationalization of family firms led by founding and later generation family members differs from the internationalization of nonfamily firms and from each other and that knowledge‐based resources moderate the relationship. Longitudinal analysis of 4,925 firm‐year observations of S&P 1500 manufacturing firms from 2002 to 2008 shows that compared to nonfamily firms, family firms run by founding (later generation) family members internationalize less (more). Knowledge resources increase (decrease) the internationalization of founder‐led (later generation) family firms. Overall, how family ownership influences firm behavior is likely to vary as much by its type as its amount. Managerial Summary: We explore the internationalization of family firms based on a sample of S&P 1500 manufacturing firms from 2002 to 2008. Compared to nonfamily firms, family firms run by founding family members internationalize less, and family firms run by later generation members internationalize more. However, as knowledge resources increase, the internationalization of founder‐led family firms increases, whereas the internationalization of firms led by later generation family members decreases. Therefore, our findings suggest that knowledge resources can facilitate or hamper international expansion in family firms, depending on the generation of family control. These findings underscore the role of goals, governance, and resources as important drivers of differences in internationalization between family and nonfamily firms, as well as of variations in internationalization among family firms.

Influence of Family Involvement on Family Firm Internationalization: The Moderating Effects of Industrial and Institutional Environments

“…The results were still robust considering the moderating effects of environmental munificence, institutional environment, and political ties (see Model 3, Model 4, Model 5, and Model 6). Thus, our result was in line with previous research [2,3,26], but it did not support the viewpoint that family management negatively impacts on family firm internationalization [5,8,25]. This positive effect was likely due to lower agency cost, as well as more family and network resources resulting from family involvement in ownership and management.…”

“…However, higher family ownership also means that family firms may acquire more family resources for internationalization, and that family owners have a strong tendency to monitor managers so as to reduce the agency cost in the internationalization process. Therefore, family ownership may positively affect family firm internationalization, which is supported by a few empirical studies [2,3,26]. Additionally, some empirical studies also support a curvilinear relationship between family ownership and internationalization [6].…”

Innovation in Family Firms: A Systematic Literature Review and Guidance for Future Research

“…Fang et al . () also consider generational ownership and observe that founding generations with higher R&D investments are more likely to pursue internationalization strategies than later generations.…”

Knowledge, Renewal and Flexibility: Exploratory Research in Family Firms

“…However, systemic characteristics of firms can influence whether or not they engage in strategic renewal. In this regard, family firms constitute a peculiar organizational context, where the identity overlap between the family and the firm tends to affect both the strategic flexibility and the KM process (Biscotti et al 2018), thus suggesting the relevance of exploring this singular context (Fang et al 2018;Gupta and Bhattacharya 2016) considering that family firms cannot be simplistically viewed as homogeneous entities (Sharma 2002;Chrisman et al 2005). In fact, a recent study from Family Business Review (Stanley et al 2019) highlights that research in family firm has begun to stress that family firms can be quite diverse and that a lot of variance exists within the family firm population.…”