Joint (Ad)ventures—Family firms' international entry mode choices for emerging markets
International Journal of Entrepreneurial Behavior & Research
ISSN: 1355-2554
Article publication date: 25 May 2020
Issue publication date: 13 August 2020
Abstract
Purpose
The aim of this study is to advance knowledge on family firms' entry mode choices by examining the linkage between target market context, especially in the emerging economies of China and India, and the dominant family firm logic of keeping ownership and control in the family.
Design/methodology/approach
We use an exploratory multiple case study analysis approach based on nine German family firms' internationalization endeavors. We use both primary and secondary data.
Findings
Traditionally, extant research concludes that family principals prefer foreign direct investments (FDIs) in order to exert maximum control when entering international markets. In contrast, our study finds a clear preference for international joint ventures (IJVs) as an initial entry mode of choice into unfamiliar markets. Our findings propose this decision to be rooted in cultural unfamiliarity and the complexity of the target markets' legal environment. The effect of these two factors is amplified by prior IJVs experiences.
Originality/value
This article offers several original insights. First, we identify the triggers of the paradoxical IJVs’ entry mode choice among family firms and thus explain the motivation for breaking with the dominant family firm logic of maximizing control. Second, we account for factors in China's and India's particular emerging market environments. In the light of family control, the unfamiliarity with these markets triggers the decision to compensate for the high level of uncertainty by engaging in an IJV partnership. Third, our study shows that family firms are indeed willing to share control if it serves the long-term survival of the firm.
Keywords
Acknowledgements
We would like to thank the editor and the anonymous reviewers for their support during the publication process. This paper is based on a research project which has been carried out in partnership with DEG/KFW (https://www.deginvest.de/International-financing/DEG/).
Citation
Loehde, A.S.K., Calabrò, A., Torchia, M. and Kraus, S. (2020), "Joint (Ad)ventures—Family firms' international entry mode choices for emerging markets", International Journal of Entrepreneurial Behavior & Research, Vol. 26 No. 6, pp. 1235-1258. https://doi.org/10.1108/IJEBR-10-2019-0573
Publisher
:Emerald Publishing Limited
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