Does transitioning from family to non-family controlled firm influence internationalization?

Abstract

Purpose

The purpose of this paper is to study the internationalization of family firms, exploring specifically if the transition from family control to non-family control (losing family managerial influence) affects a firm’s export activity.

Design/methodology/approach

Based on panel data for Spanish firms from 2006 to 2012, a random effect tobit and probit regression and a propensity score matching were run on a sample of 225 firms moving from family to non-family control (switchers) matched with 4,213 firms remaining under family control (non-switchers).

Findings

Although from a static viewpoint family controlled firms export less than their non-family counterparts, from a dynamic perspective family firms remaining under family control (non-switchers) are associated with a fall in export activity in comparison with family firms transitioning to non-family control (switchers). Both findings are related back to the socioemotional wealth (SEW) perspective.

Research limitations/implications

The findings of this study shed light on the trade-offs that family firms experience in order to balance their desire to increase their internationalization (and the risk associated with it) and their wish to maintain SEW.

Practical implications

The findings should encourage family owners and managers to take long-term strategic decisions leading to internationalization which, although risky, will prevent subsequent loss of SEW in terms of family control.

Originality/value

This work provides evidence concerning family firms’ willingness to undertake risky activities, such as internationalization, considering the threats to their wealth.

Citation

Monreal-Pérez, J. and Sánchez-Marín, G. (2017), "Does transitioning from family to non-family controlled firm influence internationalization?", Journal of Small Business and Enterprise Development, Vol. 24 No. 4, pp. 775-792. https://doi.org/10.1108/JSBED-02-2017-0029