7/23/2019 Literature Reivew the Internationalization of Family Business
http://slidepdf.com/reader/full/literature-reivew-the-internationalization-of-family-business 1/29
The internationalization of Family Business: state-of-
the-art and comprehensive research framework
Leonardo Centeno-Caffarena (PhD student) Universitat Autònoma de Barcelona, Spain
Eduardo Bocatto (PhD student)
Universitat Autònoma de Barcelona, [email protected]
Abstract
The internationalization of the family business is a new and a very limited field of
study; this paper attempts to review all available literature on this topic. The study
shows that only 4 countries have partially being studied. At the current stage of
development, this field of research is presented with incomplete and fragmented
knowledge. That is why this contribution intends to gather the main ideas presented in
past research pointing out on potential lines for future research. A comprehensive
framework of Family Business Internationalization is presented.
Key words: Internationalization, family business, family firm, family business
internationalization, literature review.
INTRODUCTION
Family business (FB) is probably an old phenomenon, but it has been adopted by the
academia only two decades ago as an important and specific topic of research, bearing
in mind its importance in the economy of many countries as well as its particularities
(Cabrera-Suarez & García-Falcon, 1999; Ward, 1987; Harris et al., 1994), either by
7/23/2019 Literature Reivew the Internationalization of Family Business
http://slidepdf.com/reader/full/literature-reivew-the-internationalization-of-family-business 2/29
2
their number (Sharma, 2004: 3), their wealth creation, employment (Upton et al., 2001)
or competitiveness (Lee, 2004; Neubauer & Lank, 1998).
In Europe the majority of businesses are family-owned (Cromie et al., 1999) as well as
in the United States (Gersick et al., 1997); about 95% of businesses in the US are
family-owned (Gallo, 1995) as well as 60% of public businesses are controlled by same
family members. In the European context Austria (83.2%) and Germany (82%)
(Donckels & Frolich, 1991) lead the group, followed by United Kingdom with 76%
(Welsch, 1991) and Spain with 71% (Gallo & García Pont, 1989). In Europe the FB
field has been considered a priority by the proper authority (European Parliament, 2003:
132-134; European Economic and Social Committee, 2003: 17) because of the growing
interest from business associations, academy and institutions at different levels,
nationally and internationally (Veciana, 1999: 7).
The internationalization of the firm is one of the topics with most abundant research
(Rialp, Rialp & Knight, 2002: 1), but a very different situation is found in the field of
the internationalization of the family firm; reviewing the literature available, very little
information was available (theoretical and empirical studies) on FBs and
internationalization (Harju & Heinonen, 2004: 1-2; Okoroafo, 1999: 149; Davis &
Harveston, 1999) since the topic has not yet gained enough attention from the academia
(Okoroafo, 1999; Davis and Harveston, 2000; Zahra, 2003; Gallo & Pont, 1996: 1;
Gallo et al., 2004: 2).
The internationalization of a business is a way of expanding the business, at the same
time, allowing available family members to obtain new positions, which are an
7/23/2019 Literature Reivew the Internationalization of Family Business
http://slidepdf.com/reader/full/literature-reivew-the-internationalization-of-family-business 3/29
3
important objective of a FB, and to financially secure family members (Gallo et al.,
2004: 3).
The internationalization of a firm is a phenomenon that affects also the FB, as family
companies are active in the international arena (Harju & Heinonen, 2004: 2), that’s why
the aim of this study is to review the available literature on the topic of
internationalization of FB, to point on possible contradictions in the field, to propose
new research venue, and to offer a framework of study.
METHODOLOGICAL ISSUES
Initial search of existing literature on the topic of FB internationalization was conducted
by utilizing key words or phrases that best suited the proposed objective, they included:
‘family business/firm internationalization’, the ‘internationalization of the family
business/firm’, and ‘family firm internationalization’; related literature about ‘family
business/firm’ and ‘firm internationalization’ was also checked in order to find possible
papers of interest. We checked the web in Spanish, English, French, Italian, and
Portuguese languages, therefore our key words were translated into those languages.
The online search was carried out using scholar-google searcher
(www.scholar.google.com), ISI Web of Knowledge (http://portal.isiknowledge.com),
and the ABI/Inform (http://proquest.umi.com/login), all of them provided a list of
references for each paper selected.
After several days of search an initial list of about 50 papers was produced. The
following step was to establish a more rigorous selection criterion to identify the papers
that directly dealt with the topic of the Internationalization of FBs; the papers had to
7/23/2019 Literature Reivew the Internationalization of Family Business
http://slidepdf.com/reader/full/literature-reivew-the-internationalization-of-family-business 4/29
4
present the following requirements: (a) should include the aforementioned key words in
the title or abstract, or give a special consideration to the proposed topic, (b) must be
either published or hanged on the web as ‘working paper’, we did not consider papers
assembled specifically for conferences or workshops (a proactive more than a reactive
focus) (c) must have an empirical application or a strong theoretical background on FB
internationalization, (d) its main focus has to be the internationalization of the FB or
would add something to this discussion whether in the theoretical framework and/or in
the empirical conclusion, (e) case studies were not considered only if they add valuable
generic information to the topic either in the framework or in the conclusions; we did
not considered papers focusing on an ethnical group, because they were adding
knowledge to a specific form of FB, and we were more interested in building up on a
generic theory of the internationalization of FBs. For papers written by the same author,
applying the same format and content, with similar outcomes, and using the same data
base, we decided to select only the most recent publication; otherwise we felt the
information would be duplicated.
After applying the above criteria we finally concluded that 12 papers were the ones that
satisfy such requirements and decided to work with them; the main focus of
concentration in one of the papers was not the internationalization of the FB, but it is
one of the dimensions developed on it (Gallo, Tapies & Cappuyns, 2004: 314).
LITERATURE REVIEW
The field of the internationalization of the FB is a new area of research for the academia,
and there are not many contributions (Okoroafo, 1999; Davis & Harveston, 2000; Gallo
et al., 2000, Harju & Heinonen, 2004); the first paper that explicitly bear such title was
7/23/2019 Literature Reivew the Internationalization of Family Business
http://slidepdf.com/reader/full/literature-reivew-the-internationalization-of-family-business 5/29
5
written only 15 years ago (Gallo & Sveen, 1991); this seminal work is the most cited
effort, becoming an emblematic research for all the others to come. In Appendix 1 we
provide a chronological perspective of the theoretical and empirical studies selected and
developed during the last 15 years (1991-2005).
About 33% of the papers selected were written during the 90’s, and the rest (67%) in the
00’s, giving us an idea of the passive welcoming that the academia gave to this new
research avenue, probably because many researchers bear in mind that FBs are less
exporter than non-family ones . In the Spanish context, 5 research centers have shown
interest in the topic, orderly by date of involvement they are: University of Navarra
(IESE), Universidad Carlos III de Madrid, Universidad de Las Palmas de Gran Canarias,
Universidad de Jaen, and Universidad Autonoma de Barcelona (UAB).
ANALYSIS AND DISCUSSIONS OF THE REVIEWED RESULTS
Authors and publishers
Spain leads the research on the field of `family firm internationalization’ in many
aspects; the most prolific writer is Spaniard Professor Gallo with 4 papers on his behalf;
in general, Spanish researchers account for 47.6% from a total of 21 accounted. The
most studied country was also Spain with 50% of the papers based on samples coming
from this country, followed by the United States with 30%, and both Australia and
Finland with 10% each.
The main source of publication has been the Family Business Review, the leading
journal on the field of family business, accounting for 58.3% of the papers; 25% of the
documents are still on a ‘working paper’ format coming from different universities.
7/23/2019 Literature Reivew the Internationalization of Family Business
http://slidepdf.com/reader/full/literature-reivew-the-internationalization-of-family-business 6/29
6
Research objectives and types of research
All the studies selected in our research have several aspects in common; first of all, they
imply that there is a phenomenon to be understood (internationalization), that there are
key elements that affect it, and that there are some individuals that exert a strong
influence in the process (family); that is why there is a tendency to take three basic
avenues: study the phenomenon as a process, establish key elements that affect such
process, or study the influence of the owner family in the process.
To facilitate the above, the different research objectives of the papers selected can be
divided into three categories: (a) those that study the internationalization process of the
FB by contrasting it with non-family counterparts, the objective is to extract the main
ideas and concepts; a total of five papers fall into this category, Swinth & Vinton, 1993;
Okoroafo, 1999; Graves & Thomas, 2004; Gallo, Tapies & Cappuyns, 2004; and
Cabrera-Suarez & Olivares-Mesa, 2005; (b) those that study the FB internationalization
process by establishing key factors/elements that either foster/promote or restrain/hinder
such process, 3 works fall into this category, Gallo & Sveen, 1991; Gallo & Garcia-Pont,
1996; and Cabrera-Suarez & Olivares-Mesa, 2005; and (c) those that study the
internationalization of the FB by analyzing the involvement of the owner family in such
process, Zahra, 2003; Harju & Heinonen, 2004; and Cabrera-Suarez & Olivares-Mesa,
2005.
Regarding the type of research, the papers can be divided into 2 categories: those with a
theoretical focus and those with an empirical one. In the first group, 2 studies (16.67%)
are found: Gallo & Sveen, 1991 and Swinth & Vinton, 1993, coincidently these are the
7/23/2019 Literature Reivew the Internationalization of Family Business
http://slidepdf.com/reader/full/literature-reivew-the-internationalization-of-family-business 7/29
7
first two papers that were published in the field, which facilitated the empirical
contributions of the others to come. Due to the fact that in 1990 there was nothing
written on the internationalization of the FB, in order to create the most basic theory on
it, these two articles extrapolated concepts from both fields: the “internationalization of
the firm” and the “family business”. The first article identifies success factors
considered to be key elements in the internationalization process of the FB (Gallo &
Sveen, 1991: 181) and the second one demonstrates that success increased when an
international joint venture was created by partners that were both family-owned
businesses (Swinth & Vinton, 1993: 19).
In the second group are the empirical contributions (83.33%), which analyze firms from
specific countries with an already established framework; so far, only samples coming
from 4 different countries have being considered in the studies (Spain, United States,
Finland, and Australia). This opens new opportunity for novel researchers interested in
entering into this field.
Theoretical framework
Definitions
Only the seminal theoretical contribution by Gallo and Sveen (1991) defined what a
“family business” is, “a business where a single family owns the majority of stock and
has total control” (1991: 181); about the “internationalization of the firm”, two
contributions developed a referential definition: Gallo and Sveen (1991: 182) and
Okoroafo (1999: 147). The rest of the reviewed papers do not use definitions to develop
their research.
7/23/2019 Literature Reivew the Internationalization of Family Business
http://slidepdf.com/reader/full/literature-reivew-the-internationalization-of-family-business 8/29
8
We foresee some difficulties in this new field of study, due to the diversity of opinions
offered by both areas, FB and the internationalization of the firm. The FB field lacks
consensus on what is a FB, resulting in businesses that can range from a single
employee up to very large corporations with thousands of employees, while firm
internationalization is a highly segmented field (key factors, process, modes of entry,
etc.). All the above could be a potential source for misleading information when
building scientific research.
In most of the papers reviewed there is no clarity regarding theories or frameworks
proposed to develop later the empirical work, and at times the reader has to estimate the
authors’ theoretical orientation; is common to find papers (specially early ones) without
a proper theoretical base, and only with a set of cites and quotes to the areas of the
interest of the author.
The field most widely used to build the FB internationalization theory, is the FB field
itself; from the selected articles, there are eight aspects studied regarding it: general
aspects about FB (Gallo & Garcia-Pont, 1996, Okoroafo, 1999; Harju & Heinonen,
2004), the internationalization of the FB (Gallo & Sveen, 1991, Gallo et al., 2004),
ownership (Gallo & Sveen, 1991; Zahra, 2003), company culture (Gallo & Sveen, 1991;
Swinth & Vinton, 1993), groups (Swinth & Vinton, 1993), family business system
(Swinth & Vinton, 1993), family involvement (Zahra, 2003), and stewardship
perspective (altruism) (Zahra, 2003: 510).
The internationalization of the firm is the second most popular field used to develop the
theoretical part of the papers selected; there are in total five features of the
7/23/2019 Literature Reivew the Internationalization of Family Business
http://slidepdf.com/reader/full/literature-reivew-the-internationalization-of-family-business 9/29
9
internationalization that are regarded, literature review (Okoroafo, 1999, Graves &
Thomas, 2004; Cabrera-Suarez & Olivares-Mesa, 2005), the different theories of
internationalization (Gallo & Garcia-Pont, 1996) the eclectic model (Davis & Harveston,
2000; Fernandez & Nieto, 2005), the sequential model (Uppsala) (Davis & Harveston,
2000; Fernandez & Nieto, 2005), and joint ventures (Swinth & Vinton, 1993).
Other important fields used are the strategic management area, studied five times:
general aspects about strategic management (Gallo & Sveen, 1991), strategic alliances
(Gallo et al., 2004; Harju & Heinonen, 2004), firm strategic risk (Zahra, 2003), and
international strategy joint venture (Swinth & Vinton, 1993); and the resource based-
view approach used in three studies (Davis & Harveston, 2000, Zahra, 2003; Fernandez
& Nieto, 2005).
The field of small and medium size firm (SME) is only developed by two authors (Gallo
& Garcia-Pont, 1996; Okoroafo, 1999), as well as organizational learning (Davis &
Harveston, 2000; Fernandez & Nieto, 2005).
The less used theories are the empirical financial structure and policies (Gallo, Tapies &
Cappuyns, 2004), the organizational structure (Gallo & Sveen, 1991), and firm life
cycle stage (Gallo & Sveen, 1991).
Four of the papers do not use dependent variables (Gallo & Sveen, 1991; Swinth &
Vinton, 1993; Gallo & Garcia-Pont, 1996; Gallo et al., 2004), the first two, are justified
by their theoretical orientation; those that do so, use the extent of internationalization
(Okoroafo, 1999), international sales (Davis & Harveston, 2000), firm
7/23/2019 Literature Reivew the Internationalization of Family Business
http://slidepdf.com/reader/full/literature-reivew-the-internationalization-of-family-business 10/29
10
propensity/intensity to export (Fernandez & Nieto, 2000), international sales (Zahra,
2003), degree of internationalization (export intensity) (Gaves & Thomas, 2004), share
of export of total turnover and main market area (Harju & Heinonen, 2004), firm’s
propensity to export/export intensity (Fernandez & Nieto, 2005), by categorizing firms
as non-exporters, indirect exporters, and direct exporters (Cabrera-Suarez & Olivares-
Mesa, 2005).
Propositions and hypothesis
In half of the papers there are no propositions or hypothesis to be tested, specially
among the early ones; the first four papers does not use them (Gallo & Sveen, 1991;
Swinth & Vinton, 1993; Gallo & Garcia-Pont, 1996; Okoroafo, 1999), and only one of
the papers test propositions (Gallo et al., 2004).
The paper with the most number of hypotheses is Davis & Harveston (2000) and the
ones with the least are Grave & Thomas (2004) and Cabrera-Suarez & Olivares-Mesa
(2005); the average number of hypothesis or propositions used are four; and none of
Gallo’s papers present any hypothesis, one of them uses propositions (Gallo et al.,
2004).
Use of theoretical models
When a new field of research is being proposed the development of a research
framework is of essence to direct future research. Nevertheless, in this new field of
research theoretical models are generally unused; the only paper that proposes a model
for the development of the topic selected is Gallo, Tapies & Cappuyns (2004: 316).
7/23/2019 Literature Reivew the Internationalization of Family Business
http://slidepdf.com/reader/full/literature-reivew-the-internationalization-of-family-business 11/29
11
MAIN CONCLUSIONS
FB internationalization as a process
After reviewing the main export development process phase-models, regardless the
differences among them as to the number, nature and content of the stages, a study
concluded that the typical process can be summarized into three broad phases: a) the
pre-engagement phase, when the firm whether sells goods solely in the domestic market
and is not interested in exporting, or exported in the past but no longer do so; b) the
initial phase, when the firm is involved in sporadic export activity and has the potential
to increase its overseas involvement but not the capacity to cope with the demands
perceived, leading to marginal export behavior or withdrawal from selling abroad
altogether; and c) the advanced phase, when the firm is a regular exporter with
extensive overseas experience (Cabrera-Suarez & Olivares-Mesa, 2005: 6).
FBs enter both phases of the international process later than non-family ones, because
of their risk-averse behavior due to the concentration of the family wealth in the
business or resistance to changes in the cultural or structural patterns usually associated
with the internationalization process; the average age at which a FB enter the advanced
phase is 38.2 years, and it is highly probable that it is being managed by the second
generation, which is usually associated with cultural, structural and strategic changes
from the younger family members who can promote that internationalization process
(Cabrera-Suarez & Olivares-Mesa, 2005: 15-16).
FBs versus non-family ones
Some of the studies accounted, refer to several differences between FBs and non-family
ones; the main aspects refer to their lower degree of international involvement
7/23/2019 Literature Reivew the Internationalization of Family Business
http://slidepdf.com/reader/full/literature-reivew-the-internationalization-of-family-business 12/29
12
(Fernandez & Nieto, 2005: 83), specially among SMEs (Graves & Thomas, 2004: 20);
in the northwest Ohio FBs SMEs export less than all firms (51% vs. 60%) (Okoroafo,
1999: 154-155), confirming the linkage between FB status (ownership) and exporting
status (Graves & Thomas, 2004: 20).
FBs are smaller in size (Grave & Thomas, 2004: 20), and their average sales are
substantially smaller than NFBs (by 45%) (Gallo, Tapies & Cappuyns, 2004: 306); also
they grow slower (or do not want to grow as much as they could if hey used all the
available resources (Gallo, Tapies & Cappuyns, 2004: 315) in both domestic and
international sales and in equity (Okoroafo, 1999: 154-155), probably because they
show a more rigid behavior (Gallo & Sveen, 1991: 181). Once the SME FB initiates the
internationalization of its operations, there is no marked difference in
internationalization progress compared to non ones, so there greatest challenge is
initiate such process (Graves & Thomas, 2004: 20).
The above results were found not to be consistent in all places because a more recent
study across Finish SMEs demonstrated that FBs where even more internationalized
than other businesses when assessing both export activities and main market areas
(Harju & Heinonen, 2004: 11).
Exporting FBs are typically initially motivated by unsolicited orders from foreign
customers, and not as a part of a previous planned strategy from them, because they do
not monitor regularly the international market place (Okoroafo, 1999: 154).
7/23/2019 Literature Reivew the Internationalization of Family Business
http://slidepdf.com/reader/full/literature-reivew-the-internationalization-of-family-business 13/29
13
About the age of the family SMEs, a study found no significant differences (Graves &
Thomas, 2004: 20); but another study found an average of 8 years difference between
FBs and non-family (Gallo, Tapies & Cappuyns, 2004: 315);
From a relational perspective, FBs are less likely to engage in networking with other
businesses, and struggle in their internationalization process due to their more inward
looking perspective and lacking the relationships required to expand internationally;
Grave & Thomas (2004) appeal to several authors when stressing in the lack of
resources required for international expansion show by FBs, such as managerial
capability which is essentially for growth strategies such as expanding internationally
(Boeker & Karichalil, 2002; Flamholtz, 1986; Hoy & Verser, 1994; Levinson, 1971;
Dyer, 1989). Such relationships could assist the firm in accessing market knowledge,
international contacts and resources and capabilities required for it international
expansion (Graves & Thomas, 2004: 20).
Key Factors that influence the international performance of FBs
Several articles (4) considered in this literature review, recognized the importance of
key factors that influence, facilitate or restrain, the internationalization expansion
process of FBs (Gallo & Sveen, 1991: 181; Fernandez & Nieto, 2005: 83; Cabrera-
Suarez & Olivares-Mesa, 2005: 16; Davis & Harveston, 2000: 116), three of them from
Spain; the successful implementation of these factors seems to accelerate the entrance in
foreign markets (Cabrera-Suarez & Olivares-Mesa, 2005: 17) and could encourage the
firm’s international expansion (Fernandez & Nieto, 2005: 83), but will depend on the
firm’s awareness of such facilitator or restraining factors (Gallo & Sveen, 1991: 181).
7/23/2019 Literature Reivew the Internationalization of Family Business
http://slidepdf.com/reader/full/literature-reivew-the-internationalization-of-family-business 14/29
14
According to the results found, we divided these factors into two groups, the external
and internal ones; the first group refers to the industry context where the firm moves
into (Cabrera-Suarez & Olivares-Mesa, 2005: 17). The second set of factors refers to the
internal context and some authors suggest that the focus on internal factors provides a
better explanation than external ones about the internationalization and sales growth
among FBs (Gallo & Pont, 1996; Davis & Harveston, 2000: 116). Considering the
information obtained from other researchers it comprises strategic planning aspects
(Gallo et al., 2004: 13), firm size (Cabrera-Suarez & Olivares-Mesa, 2005: 16;
Fernandez & Nieto, 2005: 85), organizational culture represented by the personal
characteristics of the founder (Gallo, Tapies & Cappuyns, 2004: 313), his/her age and
formal education (Davis & Harveston, 2000: 116), their managerial attitude (Gallo &
Garcia-Pont, 1996: 58), their commitment to export or propensity to international
involvement (Fernandez & Nieto, 2005: 85) and the involvement of the family
(“familiness”) (Zahra, 2003: 507).
Industry context
The speed of a firm’s internationalization is influenced by the industry in which it
belongs. Manufacturing food, beverage and tobacco firm products are the slowest,
especially if they are family-owned. Food is a product that does not internationalize
quickly due to its different consumption patterns and tastes among countries (Cabrera-
Suarez & Olivares-Mesa, 2005: 17).
Contact with foreign suppliers is also one of the most significant motivations for an
early entry in both phases, measured by import intensity, where a firm starts its
internationalization by purchasing machinery, raw materials and components from
7/23/2019 Literature Reivew the Internationalization of Family Business
http://slidepdf.com/reader/full/literature-reivew-the-internationalization-of-family-business 15/29
15
abroad, and only after that it does moves on to the outward side; this result demonstrates
that inward and outward internationalization are interrelated process through which
companies become involved (Cabrera-Suarez & Olivares-Mesa, 2005: 16).
The effective establishment of strategic alliances as a vehicle for internationalization
requires the selection of the right partners and demands commitment, certain
management capabilities and trust that the partners will maintain a relationship
consistent with the ownership structure and development of the FB (Gallo et al., 2004:
14).
Internal factors
In the strategic planning side there are two significant contributions; one refers to three
critical variables that together drive the internationalization process: (a) to possess a
product whose potential exceeds that of the local market, (b) the desire to grown the
company, and (c) an organization structure that would enable growth (Gallo et al., 2004:
13), and the other one establishing two sets of important fostering factors that develop
the internationalization process of FBs, marketing aspects (price flexibility, advertising
intensity, product diversification), and aspects regarding production (product
standardization, and large scale production) (Cabrera-Suarez & Olivares-Mesa, 2005:
17); this last research also found a positive relationship between the wide spectrum of
products that a FB sells directly in the domestic market, and its late entrance into the
advanced phase of the export process (Cabrera-Suarez & Olivares-Mesa, 2005: 16).
The strategic orientation of products for local markets coupled with inadequate level of
technology influence negatively FBs internationalization (Gallo & Garcia-Pont, 1996:
7/23/2019 Literature Reivew the Internationalization of Family Business
http://slidepdf.com/reader/full/literature-reivew-the-internationalization-of-family-business 16/29
16
57); the opposite was probed true in a study among entrepreneur-led FBs, when
internationalization and sales growth were positively affected by the increased use of
the technology, particularly Internet usage and increased investments in information
technology (Davis & Harveston, 2000: 116 -118).
Another study found that commitment to innovation is persistently and positively
statistically associated with the propensity for and extent of internationalization (Graves
& Thomas, 2004: 20); FBs consider introducing major innovations a risky activity, and
that is why they avoid or delay their entry into international markets (Cabrera-Suarez &
Olivares-Mesa, 2005: 17); in other occasions FBs do not perceived the need to innovate
to approach international markets, because they are already habituated to the local
market’s acceptance and recognition of their products or brands (Cabrera-Suarez &
Olivares-Mesa, 2005: 16).
The investment of another company (as a large-block shareholder) in a family SME has
a positive effect on its export propensity (Fernandez & Nieto, 2005: 85)
The size of the firm has a statistically significant association with early entry into both
phases of the export development process; size is relevant both for family and for non-
family businesses (Cabrera-Suarez & Olivares-Mesa, 2005: 16), and it is also positively
related to the decision to expand to foreign markets (Fernandez & Nieto, 2005: 85)
The personal characteristics of the FB founder dictates a particular way of doing
business (Gallo, Tapies & Cappuyns, 2004: 313), but also his/her age and formal
education (Davis & Harveston, 2000: 116) and managerial attitude (Gallo & Garcia-
7/23/2019 Literature Reivew the Internationalization of Family Business
http://slidepdf.com/reader/full/literature-reivew-the-internationalization-of-family-business 17/29
17
Pont, 1996: 58); the level of age and formal education of the entrepreneur-owner have a
significant relationship to internationalization and sales growth; therefore aging appears
to suppress sales growth, and contrary to higher education attained by the entrepreneur,
which has a positive effect on both internationalization and sales growth (Davis &
Harveston, 2000: 116).
Managerial attitudes in developing foreign business influences positively FBs
internationalization (Gallo & Garcia-Pont, 1996: 58), and also is mentioned the high
level of personal commitment to the process, combined with self confidence and the
necessary managerial capabilities to internationalize quickly and effectively (Gallo et al.,
2004: 14). A family SME is encouraged to commit into export propensity/international
involvement when it enter into alliances with other family-owned firms (Fernandez &
Nieto, 2005: 85)
Regarding the involvement of the family, it has mixed effects on internationalization;
such involvement is positively and significantly associated with internal sales and
negative effect on the number of countries entered (Zahra, 2003: 507); ownership was
found to be a significant variable that determines the degree and geographic scope of
internationalization; ownership and family involvement interact positively and
significantly to influence internationalization (Zahra, 2003: 507).
‘Familiness’ cannot be considered as a special strength for an internationalizing family
company, and before the phenomenon of internationalization it can become a strong
point of disagreement within the family, in some cases it may even disintegrate the
family (Harju & Heinonen, 2004: 11).
7/23/2019 Literature Reivew the Internationalization of Family Business
http://slidepdf.com/reader/full/literature-reivew-the-internationalization-of-family-business 18/29
18
The literature conclude that the 1st and 2nd generations of FBs are slower at
internationalize than NFBs (Gallo & Sveen, 1991: 189), but if they do not get involved
in foreign activities in the 1st and 2nd generation, it is unlikely that they do so in the
following ones (Okoroafo, 1999: 154); this is consistent also with other research on
family SMEs that concluded that second and subsequent generations are concerned with
international markets and encouraged the international involvement (export propensity)
and strongly commit to them (Fernandez & Nieto, 2005: 85). The previous idea is due
to the negative relationship between family ownership and international involvement
(export propensity and intensity), but it becomes positive in second- and subsequent-
generation family SMEs (Fernandez & Nieto, 2005: 84-85).
CONCLUDING REMARKS AND IMPLICATIONS
Theoretical Model
Considering that only one of the papers studied before proposed a theoretical model,
which by the way, is the only paper included whose main focus of concentration is not
specifically the internationalization of the FB (Gallo, Tapies & Cappuyns, 2004: 316)
the authors decided to include one contribution and built a comprehensive model to
study the internationalization of the FB, which definitely has to be tested in future
empirical researches.
7/23/2019 Literature Reivew the Internationalization of Family Business
http://slidepdf.com/reader/full/literature-reivew-the-internationalization-of-family-business 19/29
Figure 1Integrative Model for Internationalization of FBs
Source: Adapted from Le Breton-Miller et al. (2004) and Li et al. (2004)
The components of the model can be summarized as follows: Non-family context
includes the industry context, where the firm is found, the competitive structure of the
industry and the regulations imposed to the industry are constrain and drives of a firms
strategy, organization and governance policies. The FB itself impacts the
internationalization process by virtue of the strategy that it follows; ownership structure
will also influence the internationalization process, if the CEO or director of the
company is the founder, second, third, and so forth generations may influence the desire
Industry Context (type of industry, competitive structure, regulation…)
FB Context
• ownership structure (controlling owner, sibling partnership, cousin consortium)
• CEO education level
• previous international experience
• strategic planning
• organizational culture and design
• FB size
Social Context (Culture, social norms, ethics, religion, laws...)
Family Context
• family dynamics (quality of relationship, trust, openness, shared values, respect,…)
• family influence on business decisions, commitment to the business, importance of family funding
Internationalization Process
MotivationMarket-seeking;Customer-following;Technology-acquiringCorporate CompetenceTechnology;Information capabilities;International experience;Entrepreneurship
Market Research
Market Selection
Market Entry Mode
Low level of involvementand risk (e.g. export/sales agent)
Intermediate level ofinvolvement and risk(e.g. joint Venture)
High level of involvementand risk (e.g. subsidiary)
Time and Timing
Performance/Evaluation - Feedback
Ant ecedentsPlanning
Execution
7/23/2019 Literature Reivew the Internationalization of Family Business
http://slidepdf.com/reader/full/literature-reivew-the-internationalization-of-family-business 20/29
20
and competence to internationalize. The level of education and previous international
experience, which is found to be higher in the generations after the founder, is also an
important aspect to determine the internationalization of the FB. The characteristics of
the director/CEO will also be a critical factor, with management ability, experience,
motivation, age, and others.
The social context is an external factor that may play an important role in the
internationalization of the FB, not only the social context of where the firm is found, but
also the social context where the firm will internationalize to. Culture, social norms,
ethics, religion, laws may have a direct or indirect influence on the internationalization
process as well as in the mode of entry. The family context which is influenced by the
social context may, depending on its dynamics and influence on business decisions will
affect the internationalization process.
At the heart of the model the internationalization process is found. A firm’s
internationalization process is comprised of three major phases: antecedents, planning
and execution (Li et al., 2004). The antecedents phase is characterized by the firm’s
motivation to: (1) seek new markets where it identifies good potential for expansion; (2)
follow its customers, since in a globalized market new emerging customers may appear
in different countries or regions (e.g. a successful product or service in Spain may
generate new customers in South America); and (3) acquire technology. The Antecedent
phase also complies corporate competence in terms of technology, innovation
capabilities, international experience and entrepreneurial thinking. The Planning phase
is composed of market research, market selection, and market entry mode. Good
understanding of the entering market’s culture, tastes, legislation, etc. play an important
7/23/2019 Literature Reivew the Internationalization of Family Business
http://slidepdf.com/reader/full/literature-reivew-the-internationalization-of-family-business 21/29
21
role in the internationalization process and the chosen mode of entry. Finally, the
execution process is related to the chosen mode of entry which will determine the level
of involvement in the entering market.
Performance evaluation and feedback are very important to measure the effectiveness of
the internationalization, to identify possible corrections needed, and future strategies to
be made. The length of time that a FB takes to internationalize is an important issue that
has been previously studied and that may influence the failure or success of the
internationalization. Timing is also an important factor that has not received attention by
researchers on FB internationalization, finding the right moment, both in terms of
internal company structure and readiness of the receiving market may be a key issue for
its effectiveness.
Future research
The internationalization of FBs provide a new and vast frontier of possibilities for
research; among them future research should address the differences between family
and non family firms not yet considered in the previous studies, specially in
generational evolution aspects and cultural and governance patterns and using
alternative methods for data gathering, such as specific surveys or interviews that can be
useful for this purpose (Cabrera-Suarez & Olivares-Mesa, 2005: 17)
‘Familiness’ and the emergence of family disagreement in the context of FB
internationalization deserve also to be further studied under a qualitative approach in
both, SMEs (the somewhat dominant role of the owner-manager) and in larger family
companies, stressing on the sources and reasons of disagreement (Harju & Heinonen,
2004: 11).
7/23/2019 Literature Reivew the Internationalization of Family Business
http://slidepdf.com/reader/full/literature-reivew-the-internationalization-of-family-business 22/29
22
7/23/2019 Literature Reivew the Internationalization of Family Business
http://slidepdf.com/reader/full/literature-reivew-the-internationalization-of-family-business 23/29
23
REFERENCES
References used
Cabrera-Suárez, M. K. & García-Falcón, J. M. (1999): “La empresa familiar:
dimensiones conceptuales y perspectivas teóricas”, Revista Europea de Direccióny Economía de la empresa, Vol 8, núm. 1, pp 7-30.
Cabrera-Suárez, M. K. & Olivares-Mesa, A. (2005), “Differences and factorsinfluencing the timing of the export development process in Spanish family andnon-family firms”, Universidad de Las Palmas de Gran Canaria.
Cappuyns, K. & Pieper, T.M. (2003), “The Internationalization Process of FamilyBusinesses”, Families in Business, 2(3), 20-21.
Cromie, S; Dunn, B; Sproull, A and Chalmers, D (1999), “Small firms with a familyfocus in the Scottish highlands and islands”, University of Ulster & GlasgowCaledonian University
Davis, P. S. & Harveston, P. D. (2000), “Internationalization and organizational grow:
the impact of internet usage and technology involvement among entrepreneur-ledfamily businesses”. Family Business Review, 18, 107-120.
Donckels, R. and Fröhlich, E. (1991), “Are family business really different? EuropeanExperience from STRATOS.” Family Business Review, 4 (2), 149-160.
European Parliament (2003), “European Parliament resolution on entrepreneurship inEurope - Green Paper”, On-line document(http://europa.eu.int/comm/enterprise/entrepreneurship/green_paper/parliament-en.pdf)
Fernandez, Z. & Nieto, M. J. (2002), “International involvement of SMEs: The impactof ownership”, Working Paper, Universidad Carlos III, Madrid, Spain.
Fernandez, Z. & Nieto, M. J. (2005), “Internationalization strategy of small andmedium-sized family businesses. Some influential factors”, Family Business
Review, 18(1), 77-89.Fernandez, Z. & Nieto, M. J. (2005), “La estrategia de internacionalización de la
pequeña empresa familiar”, Cuadernos de Economía y Dirección de la Empresa,22, 107-126.
Gallo, M A (1995), “The role of family business and its distinctive characteristics behavior in industrial activity”, Family Business Review, 2( 2), p. 83-97
Gallo, M. A.; Ariño, A; Máñez, I. & Cappuyns, K. (2004), “Internationalization viastrategic alliances in family businesses”, IESE, University of Navarra, WorkingPaper No. 540, January.
Gallo, M. A. & Cappuyns, K. (1998), “Internationalization of family-owned businesses:strategic alliances, Research Paper, IESE Business School.Gallo M. A. & Estapé, M. J. (1992), “The internationalization of the family business”.
IESE, Research paper no. 230/bis.Gallo, M.A. & García Pont (1989), “La empresa familiar en la economía española”,
Papeles de Economía Española, 39, 67-85Gallo, M. A. & García-Pont, C. (1996), “Important factors in family business
internationalization”, Family Business Review, 9(1), 45-59.Gallo, M. A. & Sveen, J. (1991), “Internationalizing the family business: facilitating
and restraining forces”, Family Business Review, 4(2), 181-190.George, G.; Wiklund, J. & Zagram S. A. (2005), “Ownership and the
internationalization of small firms“, Journal of Management , 31(2), 210-233.
7/23/2019 Literature Reivew the Internationalization of Family Business
http://slidepdf.com/reader/full/literature-reivew-the-internationalization-of-family-business 24/29
24
Gersick, K. E.; Davis, J. A.; McCollom, M.; Lansberg, I. (1997), “Generation toGeneration: Life Cycles of the Family Business”, Harvard Business School Press
Graves Ch. & Thomas, J. (2003), “Venturing beyond the backyard: internationalizationof the family business”, 16th Annual Conference of Small Enterprise Associationof Australia and New Zealand, September 28-October 1.
Graves Ch. & Thomas, J. (2004), “Internationalization of the family business: alongitudinal perspective”, Int. J. Globalization and Small Business, 1(1), 7-27.
Harju & Heinonen (2004), “Internationalizing family business-fact or fable?” TurkuSchool of Economics and Business Administration, Small Business Institute,Finland.
Harlaftis, G. & Theotokas, J. (2004), “European family firms in international business:British and Greek tramp-shipping firms”, Business History, 46(2), 219-255.
Harris, D.; Martinez, J. I.; Ward, J. L. (1994): “Is strategy different for the family-owned business?”, Family Business Review, 2, 159-174
Hernández-Ortiz, M. J.; Fuentes-Lombardo, G. & Fernández-Rodríguez, Z. (2005), “Lainternacionalización de la empresa familiar: importancia de las alianzas
estratégicas como modo de acceso a los mercados internacionales”, Universidadde Jaen, Universidad Carlos III de Madrid.
Le Breton-Miller, J., Miller, D. and Steve, L. P. (2004), “Toward and Integrative Modelof Effective FOB Succession.” Entrepreneurship Theory & Practice, 28(4), 305-328.
Lee, J. (2004), “The effects of family ownership and management on firm performance”,S.A.M., Advanced Management Journal, 69(4), 46-54
Li, L., Li, D. and Dalgic, T. (2004), “Internationalization Process of Small and Medium-sized Entreprises: Toward a Hybrid Model of Experimental Learning andPlanning.” Management International Review, 44(1), 93-116.
Luostarinem, R & Gallo, M. A. (1992), “Internationalization: a challenging change forfamily business”, Proceedings of the 2nd. Family Business Network Conference,Barcelona.
Gallo, M. y Luostarinem R. (1993), Internacionalización: un cambio desafiante para lasempresas familiares, En Gallo, M. (1993), La Empresa Familiar 4. Estudio yediciones IESE, S.L., 91-101.
McKibbin, P. & Pistrui, D. (1997), “East meets West: innovative forms of foreign tradefinance between Italian family enterprises and emerging SMEs in Romania”,Family Business Review, 10(3), 263-280.
Menéndez-Requejo, S. (2004), “Growth and internationalization of family business”,Paper presented at the FBN-IFERA World Academic Research Forum,
Copenhagen, Denmark. Neubauer, F.F. & Lank, A.G. (1998), The Family Business Review: Its governance for
sustainability. New York: Routletge.Okorafo, Sam C. (1999), “Internationalization of Family Businesses: Evidence from
Northwest Ohio, USA”, Family Business Review, 12(2), 147-158.Rialp-Criado, A.; Rialp-Criado, J. & Knight, G.A.(2002), “The phenomenon of
internacional new ventures, global stara-ups, and born-globals: what do weknow after a decade (1993-20029 of exhaustic scientific inquirí? Working Paper
No. 2002/11, University Autonomous of Barcelona.Sharma, P. (2004), “An Overview of the Field of Family Business Studies: Current
Status and Directions for the Future.” Family Business Review, 17(1), 1-36.
7/23/2019 Literature Reivew the Internationalization of Family Business
http://slidepdf.com/reader/full/literature-reivew-the-internationalization-of-family-business 25/29
25
Shaver, J. M.; Mitchel, W & Yeung, B. (1997), “The effect of own-firm and other-firmexperience on foreign direct investment survival in the United States”, 1987-1992,Strategic Management Journal, 18, 811-824.
Shaw, S. & Young, S. (2001), Perspectives on Firm Growth and Internationalization:The Case of the Scottish Food Industry (Working Paper), Strathclyde International
Business Unit, University of Strathclyde.Swinth, R. L. & Vinton, K. L. (1993), “Do family-owned businesses have a strategic
advantage in international joint ventures?”, Family Business Review, 6(1), 19-30.Tsang, E. W. K. (2001), “Internationalizing the family firm: a case study of a Chinese
family business”, Journal of Small Business Management , 88-94.Tsang, E. W. K., (2002), “Learning from overseas venturing experience: the case of
Chinese family businesses”. J. Bus. Venturing 17(1), 21–40.Upton, N.; Teal, E. & Felan, J. (2001), “Strategic and business planning practices of fast
growth family firms”, Journal of Small Business Management , 39(1), 60-73.Veciana, J. (1999), ”Entrepreneurship as a scientific research program”, Revista
Europea de Direcion y Economia de la Empresa, 8(3), 11-36.
Ward, J. L. (1987), Keeping the Family Business Healthy: How to plan for continuinggrowth, profitability, and family leadership. San Francisco, CA: Jossey-Bass.
Welsch, J. H. M (1991), “Family enterprises in the United Kingdom, the FederalRepublic of Germany, and Spain: a transnational comparison”, Family Business
Review, 4, 191-203.Yeung, H. W. (2000), “Limits to the growth of family owned business? The case of
Chinese transnational corporations from Hong Kong”, Family Business Review,18, 55-70.
Zahra, S. A. (2003), “Internal expansion of U.S. manufacturing family business: theeffect of ownership and involvement”, Journal of Business Venturing, 18, 495-512.
Other papers not used
Cavusgil, S. T. (1984): «Differences among exporting firms based on their degree ofinternationalization», Journal of Business Science Research, 8(2), 195-208.
Corbetta, G., & Dematre, C. (1993): “Steering the development of family businesses: Asurvey of 45 Italian firms”, Proceedings of the 1993 Family Firm InstituteConference, Family Firm Institute, Brookline, MA, 1993.
Corbetta, G. (1995): “Patterns of development of family business in Italy”, Family
Business Review, 8(4), 255-265.Corbetta, G., Montemerlo, D. (1999): “Ownership, governance and management issues
in small and medium-size family businesses: a comparison of Italy and the UnitedStates”, Family Business Review, 12 (4), 361–374.Davis, P., & Stern, D. (1980): “Adaptation, survival, and growth of the family business:
An integrated systems perspective”, Human Relations, 34(4), 207-224.Fernández, Z. y Nieto, M.J. (2003): “Iniciativas internacionales de la empresa familiar”.
Iniciativa Emprendedora, nº 39, pp. 68-75.Gallo, M. y García Pont, C. (1998): “La proyección internacional de la empresa familiar.
Factores Impulsores y retardadores”. Iniciativa Emprendedora y Empresa
Familiar , nº 11, pp. 41-45.Gélinier, O. (1996) : La réusite des entreprises familiales: Les moyennes entreprises
familiales
— un atout pour l’avenir, Paris: Maxima.
7/23/2019 Literature Reivew the Internationalization of Family Business
http://slidepdf.com/reader/full/literature-reivew-the-internationalization-of-family-business 26/29
26
Hax, A. C. & Majluf, N. S. (1984) : Strategic Management : an integrative perspective.Englewood Cliffs, NJ.: Prentice Hall.
James, Harvey S. (1999): “What Can the Family Contribute to Business? ExaminingContractual Relationship”, Family Business Review, 12(1), 61-71.
James Jr., H.S. (1999): “Owners as manger, extended horizons and the family firm”. Int.
J. Econ. Bus. 6 (1), 41–55.Luostarinen, R. y Hellman, H. (1994): “The internationalization processes and
strategies of finish family firms”. CIBR Research Papers, Series Y-1, Helsinki.Tan, W. y Fock, S.T. (2001): "Coping with growth transitions: the case of Chinese
family businesses in Singapore", Family Business Review, 14(2), 123-140.Salyards, D. M. (2000): “Doing business in India: a Minnesota entrepreneur’s
experience, Family Business Review, 13(4), 331.Zahra, S.A. (2001): “Ownership and Involvement and International Expansion: An
Empirical Test of the Stewardship Theory among Family Firms, Theories of theFamily Enterprise: Establishing a Paradigm for the Field”, University of AlbertaSchool of Business, Canada.
Conference/congress papers and thesis (not published)
Ariño, A.; Cappuyns, K.; Gallo, M. y Máñez, I. (2000): “El proceso deinternacionalización avanzado de las empresas familiares: involucración de lasempresas familiares en alianzas estratégicas”. I Congreso Nacional deInvestigación sobre la Empresa Familiar, Instituto de Investigación de la EmpresaFamiliar. Valencia, septiembre, pp. 375-399.
Carsrud, A. (1994): “Lessons learned in creating a family business program”.Unpublished manuscript, University of California, Los Angeles.
Claver, E.; Molina, J. y Quer, D. (2000): “Un enfoque estratégico para lainternacionalización de la empresa familiar”. I Congreso Nacional deInvestigación sobre la Empresa Familiar, Instituto de Investigación de la EmpresaFamiliar. Valencia, septiembre, pp. 419-447.
Nieto, M. (1999): “Decisiones estratégicas de la empresa familiar: innovación eInternacionalización”. IX Congreso Nacional ACEDE. Burgos. 12, 13 y 14 deSeptiembre.
Nieto, M. J. (2001): “Tipos de Propiedad y Comportamiento Estratégico de la Empresa”,Tesis no publicada, Departamento de Economía de la Empresa, UniversidadCarlos III de Madrid.
Seijo Marcos, E. y Menéndez Requejo, S. (2004): “Internacionalización de las grandes
empresas Familiares españolas”, XIV Congreso ACEDE, Conocimiento yCompetitividad, Murcia, 19-21 de Septiembre.
7/23/2019 Literature Reivew the Internationalization of Family Business
http://slidepdf.com/reader/full/literature-reivew-the-internationalization-of-family-business 27/29
7/23/2019 Literature Reivew the Internationalization of Family Business
http://slidepdf.com/reader/full/literature-reivew-the-internationalization-of-family-business 28/29
7/23/2019 Literature Reivew the Internationalization of Family Business
http://slidepdf.com/reader/full/literature-reivew-the-internationalization-of-family-business 29/29
Author/Year Theory Applied
Gallo & Sveen (1991) Key aspects of FBI, strategic management model of Hax & Majluf (1984), FB (ownership, andcompany culture), organizational structure, firm life cycle stage (p. 182-188)
Swinth & Vinton (1993) Brief literature review on international joint venture, FB’s theory (groups, FB system, culture,strategic issues of FBs in international joint ventures) (p. 20-26)
Gallo & Garcia-Pont (1996) Literature review on the different theories on internationalization of firm, as well as consideringdifferent countries and sectors, and the way it is measured; also the particularities of FBs and SMEs
(p. 148-149)Okoroafo (1999) Literature review on the internationalization of the firm, FB and small firms (p. 148-150)
Davis & Harveston (2000) The eclectic model, resource-based view (RBV), organizational learning, and sequential model(Uppsala) (p. 3-5)
Zahra (2003) Literature review on intangible resources, stewardship perspective, altruism, strategic risk,ownership, and family involvement (p. 498-500)
Gallo, Tapies & Cappuyns(2004)
Literature review of empirical financial structure and policies (6 researches) p. 304
Gallo, Ariño, Máñez &Cappuyns (2004)
A brief literature review of FBI papers, FB literature (focus on generation propensity tointernationalize), and strategic alliances (p. 2-3)
Graves & Thomas (2004) Literature review on 4 perspectives of internationalization (economic, process, relational, andcapabilities) (p. 9-11)
Harju & Heinonen (2004) Strategic alliances and studies on FB
Fernandez & Nieto (2005) Eclectic, resource-based view (RBV), organizational learning, and sequential model (Uppsala) (p.78-80)
Cabrera-Suarez & Olivares-Mesa (2005)
Based on other studiesInternational studies
Bibliographic sources of FBs internationalization studies
Source of publication Number of
papers
includedFamily Business Review 7
Working Paper 3
Journal of Business Venturing 1
International Journal Globalisation& Small Business 1
Total 12
Top Related