Family firm internationalization: Past research and an agenda for the future

Although the study of family firm internationalization has generated considerable scholarly attention, existing research has offered varied and at times incompatible findings on how family ownership and management shape internationalization. To improve our understanding of family firm internationalization, we systematically review 220 conceptual and empirical studies published over the past three decades, structuring our comprehensive overview of this field according to seven core international business (IB) themes. We assess the literature and propose directions for future research by developing an integrative framework of family firm internationalization that links IB theory with conceptual perspectives used in the reviewed body of work. We propose a research agenda that advocates a cross-disciplinary, multi-theoretic, and cross-level approach to studying family firm internationalization. We conclude that family firm internationalization research has the potential to contribute valuable insights to IB scholarship by increasing attention to conceptual and methodological issues, including micro-level affective motivations, background social institutions, temporal perspectives, and multi-level analyses

Family involvement and firms’ establishment mode choice in foreign markets

Extant literature on foreign entry increasingly recognizes firms’ heterogeneity as a potential reason for inconsistency in results on the establishment mode choice, i.e. whether and under which conditions firms should choose to enter a new country through a greenfield investment or an acquisition. Our study contributes to this debate by identifying family ownership and family involvement in management as potential powerful sources of such heterogeneity. Integrating international business studies with both corporate finance literature on family firms and recent contributions from the Socio Emotional Wealth perspective on family ownership, we claim that, due to greater risk aversion and lower access to information, the family involvement either in the firm ownership and management leads to a higher propensity towards greenfield initiatives (vs. acquisitions). However, we also find that such a propensity decreases with international experience especially in family-owned firms given the greater ability of professionalized management to overcome family-related concerns on making acquisitions. Our analysis on 1,045 foreign initiatives undertaken by 311 Italian family and non-family firms between 2003 and 2013 confirms our expectations – indicating family ownership as a significant driver of international business choices

Separation of Ownership and Control: Delegation as a Commitment Device

This paper provides a theoretical model for explaining the separation of ownership and control in firms. An entrepreneur hires a worker, whose effort is necessary for running a project. The worker\'s effort determines the probability that the project will be completed on time, but the worker receives some unobservable benefi t by continuing his employment in the project. Thus, motivating the worker requires an efficiency wage which is inflated by the private benefit. The entrepreneur would pay out a smaller wage if he could commit to terminate the project if a delay occurs, but this threat is not credible, because the project has positive continuation value. We show that hiring a manager can solve this time-inconsistency issue and reduce the efficiency wage. We extend the model to include managerial moral hazard and we examine the conditions under which separation of ownership and control is more likely to happen. The model is consistent with many of the findings of the empirical literature, while it generates some new predictions too

Explaining the effect of rapid internationalization on horizontal foreign divestment in the retail sector. An extended penrosean perspective

Building on and extending Penrosean logic we argue that rapid international expansion by firms might lead to a breach of Penrosean constraints on efficient expansion and to subsequent divestment of international operations to bring firm scope back into Penrosean constraints. We further predict that intra-regional concentration and international experience moderate the above effect because they influence firms ability to avoid a breach of Penrosean constraints and/or weaken the consequences of such a breach. Using data on the international expansion and divestment of large retail MNEs over the period 2003-2012 we find empirical support for the proposed extended Penrose effect in explaining international divestment as well as for the moderating effects of intra-regional concentration and international experience. Our study contributes to the development of Penrosean logic and to our understanding of the factors that drive firms to divest overseas operations

Defining family business: a closer look at definitional heterogeneity

Researchers have used a myriad of different definitions in seeking to explain the heterogeneity of family firms and their unique behavior; however, no widely-accepted definition exists today. Definitional clarity in any field is essential to provide (a) the basis for the analysis of performance both spatially and temporally and (b) the foundation upon which theories, frameworks and models are developed. We provide a comprehensive analysis of prior research and identify and classify 82 definitions of family business. We then review and evaluate five key theoretical perspectives in family business to identify how these have shaped and informed the definitions employed in the field and duly explain family firm heterogeneity. Finally, we provide a conceptual diagram to inform the choice of definition in different research settings