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Home-region focus and performance of family firms: The role of family vs non-family leaders

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Abstract

Do family firms benefit more from a regional or a global geographic scope? We suggest it depends on their family leadership type – family vs non-family leadership. We offer a nuanced view of agency and stewardship theories to hypothesize that family leaders are most beneficial when pursuing a regional strategy (i.e., high home-region focus (HRF)), whereas non-family leaders are more advantageous when pursing a global strategy (i.e., low HRF). Utilizing a sample of 202 Western European firms from 1996 to 2006, we find support for this central hypothesis. Thus family leadership influences the degree to which family firms benefit from HRF.

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Notes

  1. The expected effects are assumed to be present in the short to medium term. In the long term, if more efficient institutions of capitalism prevail over less efficient ones, it can be expected that family firms would, on average, shift toward a “fit” between the nature of their executive leadership (family vs non-family) and degree of internationalization (low vs high HRF). We thank the Editor for this insightful point.

  2. Private firms have no legal obligation to disclose financial statements, so the reliability of their data may be questionable (Schulze et al., 2001).

  3. The Durbin–Wu–Hausman test confirmed that these variables are jointly endogenous.

  4. We thank an anonymous reviewer for this suggestion. For Models 2, 4, and 6, we confirmed that the instruments are exogenous (Sargan's p>0.10). Their Cragg–Donald statistic of 5.49 also exceeded the Stock and Yogo (2005) critical value of 4.99 at 20% bias for three endogenous (maximum tabulated) and five instrumental variables.

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Acknowledgements

The authors would like to thank the Editor, Dr Alain Verbeke, the three anonymous JIBS reviewers, Charles Dhanaraj, Jörg Keller, and Franz W. Kellermanns for their very insightful and constructive comments.

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Authors and Affiliations

  1. College of Business Administration, Northeastern University, Boston, USA

    Elitsa R Banalieva & Kimberly A Eddleston

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  1. Elitsa R Banalieva
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  2. Kimberly A Eddleston
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Correspondence to Elitsa R Banalieva.

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Accepted by Alain Verbeke, Area Editor, 27 April 2011. This paper has been with the authors for three revisions.

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Banalieva, E., Eddleston, K. Home-region focus and performance of family firms: The role of family vs non-family leaders. J Int Bus Stud 42, 1060–1072 (2011). https://doi.org/10.1057/jibs.2011.28

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