The myth of the stay-at-home family firm

How family-managed SMEs can overcome their internationalization limitations

Jean-Francois Hennart, A. Majocchi, E. Forlani

Research output: Contribution to journalArticleScientificpeer-review

Abstract

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.
Original languageEnglish
Pages (from-to)758-782
JournalJournal of International Business Studies (JIBS)
Volume50
Issue number5
DOIs
Publication statusPublished - Jul 2019

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Sales
Managers
Industry
Finance
Family firms
Internationalization
Small and medium-sized enterprises
Gravitation
Business model
Niche
Governance

Keywords

  • SMEs' internationalization
  • global niche strategies

Cite this

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title = "The myth of the stay-at-home family firm: How family-managed SMEs can overcome their internationalization limitations",
abstract = "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.",
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The myth of the stay-at-home family firm : How family-managed SMEs can overcome their internationalization limitations. / Hennart, Jean-Francois; Majocchi, A.; Forlani, E.

In: Journal of International Business Studies (JIBS), Vol. 50, No. 5, 07.2019, p. 758-782.

Research output: Contribution to journalArticleScientificpeer-review

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