Why is Family Firms’ Internationalization Unique? A Meta–Analysis

Arrègle, Jean-Luc; Durán, Patricio; Hitt, Michael A.; Essen, Marc van

doi:10.1111/etap.12246

Cited by 252 publications

(315 citation statements)

References 116 publications

(187 reference statements)

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“…Our results suggest that family‐managed firms are more averse to internationalization than family firms managed by nonfamily professionals. The results are consistent not only with our theoretical predictions, but also with prior studies in other contexts (Arregle et al, ) that have reported that a significant family presence in both ownership and top management leads to lower internationalization in terms of both scale and scope and internationalization strategies are more successful when the CEO is a nonfamily member (Banalieva & Eddleston, ). Earlier studies identify other factors that make family managers more risk averse (Graves & Thomas, ) and focused on stability (Lee, ), thus discouraging growth strategies like internationalization (Fernández & Nieto, ).…”

Section: Discussionsupporting

confidence: 93%

How does family involvement affect a firm's internationalization? An investigation of Indian family firms

Ray

Mondal

Ramachandran

2018

Global Strategy Journal

136

163

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Research Summary: We investigate whether and how family ownership and management influence firms' internationalization strategies in an emerging economy in which family firms are dominant. Anchoring on the willingness and ability framework and drawing on the socioemotional wealth perspective and agency theory, we theorize how the heterogeneity among family firms in their ownership structures, concentration, and family involvement in management shapes the firms' internationalization strategies. We also theorize how certain contingencies, such as the presence of foreign institutional ownership and family management, moderate the relationship between family ownership and internationalization strategy. We test our predictions by using a proprietary, longitudinal panel dataset of 303 leading family firms from India and find support for most of our theoretical predictions. Managerial Summary: Internationalization has emerged as a dominant strategy for firms in a globally interconnected world. We observe that ownership structure and management have significant bearing on internationalization strategies of family firms, as family owners and managers are more averse to internationalization. Family firms' aversion to internationalize is more pronounced when families can exercise greater control on firms' actions through the combined effect of higher family ownership (primarily through strategic control) and family's participation in management (through strategic, administrative, and operational control). However, certain contingencies, such as the higher ownership of foreign institutions and presence of professional managers, help business families improve their understanding of international markets, reduce the fear of the unknown, and better appreciate the benefits of internationalization, thereby aiding greater internationalization of family firms.

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Section: Discussionsupporting

confidence: 93%

How does family involvement affect a firm's internationalization? An investigation of Indian family firms

Ray

Mondal

Ramachandran

2018

Global Strategy Journal

136

163

View full text Add to dashboard Cite

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“…However, multidimensional measurement approaches are still limited (Verbeke, Li, & Goerzen, ), especially in studies on family firms (e.g., Arregle, Naldi, Nordqvist, & Hitt, ; Arregle et al, ; Pukall & Calabrò, ; Zahra, ). The lack of consistency in operationalization may explain to some extent the inconsistent results in regard to whether family firms are more or less likely to internationalize than nonfamily firms (Arregle et al, ). Therefore, we answer calls in the family firm literature to include multiple dimensions of internationalization (Arregle et al, ; Banalieva & Eddleston, ; Pukall & Calabrò, ).…”

Section: Theoretical Background and Hypothesesmentioning

confidence: 99%

The mixed gamble of internationalization in family and nonfamily firms: The moderating role of organizational slack

Alessandri

Cerrato

Eddleston

2018

Global Strategy Journal

169

186

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Research Summary: The unique preferences of family firms may lead to internationalization strategies that differ from those of nonfamily firms. Furthermore, heterogeneity among family firms may lead to variation in internationalization. From the mixed gamble perspective, we examine the internationalization of different types of family firms (weak family owned, strong family owned, and family owned and managed), as well as nonfamily firms, considering how differences in family involvement alter the perceptions of potential gains and losses to socioemotional and financial wealth. We also highlight the varying sensitivities of nonfamily firms and types of family firms to the effects of available and recoverable slack. Our findings underscore differences in internationalization strategies among family and nonfamily firms and demonstrate that slack alters the mixed gamble calculus of internationalization for the different types of firms. Managerial Summary: Whether family firms internationalize more or less than nonfamily firms is debated. We aim to reconcile this debate by investigating the extent and breadth of internationalization and home region orientation. We propose that inconsistent results regarding family firms’ internationalization are due to their heterogeneity whereby family ownership and management lead to different preferences. Study results support our framework by demonstrating that while nonfamily firms exhibit the highest levels of internationalization, there is much variance among family firms. Additionally, we demonstrate that financial slack further explains differences between family and nonfamily firms. Our study therefore offers a richer understanding of family and nonfamily firms’ internationalization and reveals significant differences among family firms that suggest family owners and managers view the risks of internationalization differently.

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“…According to this view, conflicts of interests arise in family firms between majority and minority shareholders. As Arregle, Duran, Hitt, and Van Essen (2017) point out, the agency conflict between family and nonfamily shareholders-a conflict principal to principal-is most common in family firms; the reason proposed by Singla, Veliyath, and George (2014) responds to the fact that family managers can take decisions that benefit their family instead of all the shareholders. In this vein, Morck, Wolfenzon, and Yeung (2005) owner, it is expectedly elevated and problematic costs for outside investors.…”

Section: The Moderation Effect Of Family Ownershipmentioning

confidence: 99%

Does corporate social responsibility affect tax avoidance: Evidence from family firms

López-González

Martínez‐Ferrero

García‐Meca

2019

Corp Soc Responsibility Env

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The purpose of this paper is to shed light on the effect of corporate social responsibility performance on tax avoidance. It also examines whether family ownership affects tax avoidance practices by socially responsible performance. Based on an international sample of 6,442 firm-year observations from 2006 to 2014, we use several panel-data regression models. We find that social and environmental performance is negatively related with tax avoidance so that firms with a greater socially responsible performance show a lower tax-saving practices. However, we find that this negative relation is lower in family-owned firms, what suggests that despite the fact that family firms show a greater socially responsible behavior aimed to preserve their socioemotional endowments, family ownership is positively associated with tax avoidance practices.

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Why is Family Firms’ Internationalization Unique? A Meta–Analysis

Cited by 252 publications

References 116 publications

How does family involvement affect a firm's internationalization? An investigation of Indian family firms

How does family involvement affect a firm's internationalization? An investigation of Indian family firms

The mixed gamble of internationalization in family and nonfamily firms: The moderating role of organizational slack

Does corporate social responsibility affect tax avoidance: Evidence from family firms

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