TY - JOUR
T1 - The myth of the stay-at-home family firm
T2 - How family-managed SMEs can overcome their internationalization limitations
AU - Hennart, Jean-Francois
AU - Majocchi, A.
AU - Forlani, E.
PY - 2019/7
Y1 - 2019/7
N2 - The prevalent view among family-firm internationalization scholars is that family management discourages internationalization. This is because selling abroad is said to require more specialized managers and more resources than selling at home, and yet family firms are unwilling to recruit non-family managers with the required international skills and to dilute their control to obtain the necessary finance. We hypothesize that this argument overlooks the possibility that managers of family-managed SMEs choose business models that both minimize the above-mentioned limitations and leverage the strengths of family governance. Specifically, we argue that selling quality products in global niches allows family-managed SMEs to internationalize without the cosmopolitan managers and the high financial investments required for selling mass-market products abroad; at the same time a global niche business model requires the long time horizon and the high level of social capital that family governance can provide. Modeling a firm’s foreign sales through a gravity model, we test this hypothesis on a large sample of SMEs from four European Union countries. We find that family-managed SMEs have fewer foreign sales than other type of SMEs, but that the difference is partially bridged if family-managed SMEs have adopted a global niche business model.
AB - The prevalent view among family-firm internationalization scholars is that family management discourages internationalization. This is because selling abroad is said to require more specialized managers and more resources than selling at home, and yet family firms are unwilling to recruit non-family managers with the required international skills and to dilute their control to obtain the necessary finance. We hypothesize that this argument overlooks the possibility that managers of family-managed SMEs choose business models that both minimize the above-mentioned limitations and leverage the strengths of family governance. Specifically, we argue that selling quality products in global niches allows family-managed SMEs to internationalize without the cosmopolitan managers and the high financial investments required for selling mass-market products abroad; at the same time a global niche business model requires the long time horizon and the high level of social capital that family governance can provide. Modeling a firm’s foreign sales through a gravity model, we test this hypothesis on a large sample of SMEs from four European Union countries. We find that family-managed SMEs have fewer foreign sales than other type of SMEs, but that the difference is partially bridged if family-managed SMEs have adopted a global niche business model.
KW - SMEs' internationalization
KW - global niche strategies
U2 - 10.1057/s41267-017-0091-y
DO - 10.1057/s41267-017-0091-y
M3 - Article
SN - 0047-2506
VL - 50
SP - 758
EP - 782
JO - Journal of International Business Studies
JF - Journal of International Business Studies
IS - 5
ER -