While the extant literature has examined the influence of controlling and non-controlling
principals on the internationalization decisions of emerging market firms, heterogeneity among
non-controlling principals is largely ignored. The risk characteristics of different groups of
owners, shaped by their institutional environments, could contribute to the differences in their
preferences for firm internationalization. In this paper, we draw insights from institutional theory
and behavioral risk perspective to examine the risk propensities and risk perceptions of various
non-controlling principals, such as pressure-resistant (FIIs and mutual funds) and pressuresensitive
(banks, insurance companies and lending institutions) institutional investors. Empirical
results from a sample of 2364 unique Indian firms during the 2005-2014 time-period show that,
after controlling for firm-level resources and capabilities identified in prior literature, the
ownership share of different types of institutional investors is associated with firms’ international
investments differently. While pressure-sensitive institutional investors, such as banks and
insurance companies, are not supportive of foreign investments by firms, pressure-resistant
institutional investors, such as FIIs and mutual funds, are supportive of this strategic decision.
Furthermore, our results show that the family ownership in a firm (measured in terms of family
shareholding) further lowers the preference of pressure sensitive institutional investors for
internationalization, whereas family ownership positively moderates the pressure resistant
investors towards internationalization
