Academic journal article Journal of Business and Entrepreneurship

Internationalization of the Family Firm: The Contribution of an Entrepreneurial Orientation

Academic journal article Journal of Business and Entrepreneurship

Internationalization of the Family Firm: The Contribution of an Entrepreneurial Orientation

Article excerpt

ABSTRACT

This paper uses a longitudinal database to examine how family businesses compare with their non-family counterparts in one form of entrepreneurial activity, internationalization. It then evaluates some qualitative data to explore what elements of Lumpkin and Dess' (1996) entrepreneurial orientation - autonomy, innovativeness, risk taking, proactiveness, and competitive aggressiveness - may have been evident when family businesses internationalized. Results indicate that family firms are less likely to be internationally active compared with non-family firms. While the importance of innovativeness for international expansion is highlighted, findings suggest that unless family business managers have the freedom to act autonomously, the ability to benefit internationally from such innovation may be limited.

INTRODUCTION

Internationalization can be viewed as a bonafide form of entrepreneurial activity (Ibeh & Young, 2001) with export performance being conceptualized as "...dependent on the fit between a firm's strategic (entrepreneurial) orientation, its channel structure and the environment" (Yeoh, 1995, cited in Ibeh & Young, 2001, p. 566). While family businesses do participate in international activity, the stereotypical family business is not always depicted as entrepreneurial but rather as conservative and risk averse. This may be due in part to the unique influence of family culture and dynamics on their operations typified by the custodial role of passing on inherited wealth from one generation to another.

The purposes of this paper are to examine the role of an entrepreneurial orientation in the internationalization of family businesses - specifically, whether family and non-family firms are similar with regard to international expansion - and to probe what elements of an entrepreneurial orientation might be important in the internationalization of family firms.

ENTREPRENEURIAL ORIENTATION

The concepts of entrepreneurship and entrepreneurial activity have long been debated, and there is a lack of consensus about what characterizes them across a range of organizational forms and industries. Definitions of entrepreneurship have evolved (see Dollinger, 1999) from Knight's (1921) view that profits emerge from bearing uncertainty and risk, and Schumpeter's (1934) carrying out of new combinations of firm organization, through to Stevenson, Roberts, and Grousbeck's (1989) pursuit of opportunity without regard to resources currently controlled. In addition to identifying conditions for successful entrepreneurship, researchers have explored characteristics of the ideal entrepreneur (see Kao, 1995). Unfortunately there has been a lack of integration which has slowed the field of entrepreneurship being defined with academic rigor, as Brockhaus (1994) suggests is also the case with the family business field.

The more recent description of entrepreneurial orientation (EO) refers to the "processes, practices, and decision-making activities that lead to new entry" via a start-up firm, through an existing firm or through a process of corporate venturing (Lumpkin & Dess, 1996, p. 136). The idea of EO emerged from Van de Ven and Poole's assertion that "new business entry opportunities can be successfully undertaken by purposeful enactment" (cited in Lumpkin & Dess, 1996, p. 136) and as part of a strategic choice. Lumpkin and Dess (1996) review various studies about entrepreneurship and identify five dimensions of EO, viz autonomy, innovativeness, risk taking, proactiveness, and competitive aggressiveness, which they define as follows:

Autonomy refers to the independent action of an individual or a team bringing forward an idea and carrying it to completion.

Innovativeness reflects the firm's tendency to engage in and support new ideas and experimentation that may result in new products or services.

Risk taking might include either venturing into the unknown, or incurring heavy debt or making large resource commitments, in the interest of obtaining high returns by seizing opportunities. …

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