Academic journal article Journal of Small Business Strategy

Should Family Firms Internationalize? Evidence from the Survey of Business Owners

Academic journal article Journal of Small Business Strategy

Should Family Firms Internationalize? Evidence from the Survey of Business Owners

Article excerpt

Introduction

Family-owned firms make important contributions to today's businesses in the form of job creation and growth in the economy. There is widespread agreement that family-owned firms will eventually consider internationalization as one strategy for business growth (Kontinen & Ojala, 2010; Patel, Pieper, & Hair, 2012). Understanding the characteristics of these firms and their business owners may shed light on the importance in measuring the economy's overall well-being (Lichtenstein, 2014). A number of studies have examined the relationships between small- and medium-sized enterprises (SMEs), which are often family businesses (Patel et al., 2012), and owner demographics (Blackburn, Hart, & Wainwright, 2013), business acquisition (Fairlie & Robb, 2009), and performance (Mittelstaedt, Harben, & Ward, 2003; Wincent, 2005; Wolff & Pett, 2000). However, few studies have explored the relationship between owner demographics, business acquisition, and business context using efficiency measures of performance as demonstrated by sales per employee and sales per payroll (Blackburn, Hart, & Wainwright, 2013; Heileman, Pett, & Mayer, 2016; Pett & Wolff, 2016). Furthermore, few studies have examined these performance outcomes using a holistic measure of internationalization as it relates to family firms (Kontinen & Ojala, 2010; Pukall & Calabro, 2014).

There is an increasing interest in ascertaining whether family-owned firms achieve superior performance when compared with their non-family counterparts. Further research is needed to understand the determinants of family firm performance (Graves & Shan, 2014). The motivation for this research was to determine if there were significant differences between family-owned firms with internationalization and other firm types, specifically, family-owned firms without internationalization and non-family-owned firms.

Theoretical Framework and Hypotheses

Today's global markets and environment play an important role in the growth and success of family-owned firms. Growth is a major strategic decision for all business enterprises, and global expansion is one available option for firms to consider. However, internationalization is a complex pathway not often chosen by family firms. Without timely and productive responses to global shifts, many family businesses potentially face decline or failure (Patel et al., 2012).

The intention of this study was to explore family-owned firms with internationalization in conjunction with the business characteristics and performance. The central research question we sought to investigate was: Do different firm types-that is family-owned firms with internationalization, family-owned firms without internationalization, not family-owned firms with internationalization, and not family-owned firms without internationalization-have different characteristics such as owner demographics, business acquisition, and business context, as well as different business performance?

Numerous studies have examined SMEs relative to size and characteristics such as owner demographics and business acquisition methods (Blackburn et al., 2013; Fairlie & Robb, 2009; Mittelstaedt et al., 2003; Wincent, 2005; Wolff & Pett, 2000). On the other hand, few studies have explored the relationship between owner demographics, business acquisition, and business context with measures of performance as demonstrated by sales and employee efficiency with regards to sales (Blackburn et al., 2013; Heileman et al., 2016; Pett & Wolff, 2016).

Family Firms

Family firms represent a significant economic force, yet no clear consensus exists regarding the definition of what constitutes a family business (Abdellatif, Amann, & Jaussaud, 2010; Kontinen & Ojala, 2010). Chua, Chrisman, and Sharma (1999) provided a comprehensive review of the literature on the definition of family business. Several observations were made about these definitions. …

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