The project here proposed is aimed at investigating the internationalization strategies of family firms. In particular, it is intended to study how and to what extent the modes and dynamics of foreign market entry may be influenced by the familiness. The research will analyse the patterns of investments into foreign markets by family firms in order to find out i) how they compare to their non-family peers and ii) how heterogeneity among family firms explains internationalization strategy implementation.
The large economic relevance of family firms calls for a greater effort in studying their growth strategies, in order to deepen our understanding of how different factors at the firm level impact strategy choices and thus provide useful policy recommendations for those who are in charge of strengthening the competitiveness of domestic firms.
The research will provide both theoretical and empirical contributions. By relying on behavioural interpretations of families¿ decision-making processes and the socio-emotional wealth (SEW) approach ([1]; [2]) the contributors will theoretically predict how family firms differ from non-family firms and among them in the dynamics of international expansion.
To test the research hypotheses coming from the theoretical framework, a sample of Italian firms followed up from 2000 to 2016 will be used. Empirical analyses will be carried out through econometric techniques.
By jointly looking at investments, divestiture and re-investment decisions, we would be able to go deeper into the factors explaining the dynamics of the international expansion of family firms and add a new perspective through which we can look at the impact of familiness on firms¿ strategies.
¿ A. CONTRIBUTION WITH RESPECT TO LITERATURE
This research project adds first of all to the academic debate on entry strategy in foreign market. Previous research has traditionally relied mainly upon economic theory. Despite the intense use of economic methods has produced considerable knowledge accumulation, we believe this overreliance on economics has excessively constrained the research trajectories. More attention to sociological characteristics of business is needed to develop an effective theory of market entry. Along this line, our conceptual framework has the merit of integrating the analysis of the social and emotional dimensions of family firms¿ corporate governance and its constituencies with the international business literature on the entry mode choice.
Second, it adds to the family business literature as we believe that a deeper understanding of how family firms compare to non- family firms in the way they implement strategies, which requires looking more carefully at the processes involved, is worth of investigation because it would contribute to considerably enrich our knowledge about how families navigate the business ventures. So far too much emphasis has been devoted to differences between family firms and non- family firms in terms of outcomes, i.e. performance, internationalization degree, diversification, and so on. In the realm of family business literature, linking the SEW perspective of family firms to their strategy implementation can contribute to enhance our understanding of how and to what extent socio-emotional drivers of families¿ decision making impact not just the outcome itself but the route undertaken to reach it.
¿ B. POTENTIAL APPLICATIONS, SCIENTIFIC AND/OR SOCIO-ECONOMIC IMPACT (313)
By jointly looking at investments, divestiture and re-investment decisions, we would be able to go deeper into the factors explaining the dynamics of the international expansion of family firms and add a new perspective through which we can look at the impact of familiness on firms¿ strategies.
This study also has implications for practice. Specifically, we suggest that SEW-driven considerations may make family firms more prone to be constrained in their decision making process, particularly when implementing their internationalization strategies. Accordingly, they should carefully balance the risk of SEW dilution with greater involvement in the firm of external investors and managers that give the firm access to new knowledge and experience and mitigate the entrenchment effect. This way family firms may smooth internal orientation biases, improve the ability to manage complex operations under uncertain conditions, and develop a willingness to pursue less conservative strategies.