Abstract
This paper analyses the relationship between the internationalisation strategies of SMEs and types of ownership. Different types of ownership affect firms, and this in turn will influence the internationalisation strategy adopted. Using a sample of Spanish SMEs, our results show that internationalisation is negatively related to family ownership and positively related to corporate ownership. We have also observed that the presence of a corporate blockholder in family firms encourages internationalisation. These results support the idea that ownership type influences the decision to internationalise.
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Notes
La Porta et al. (1999) found another blockholder: the state. However, a gradual privatisation process has been developed in the last few years.
Some studies use sales growth to distinguish entrepreneurial from non-entrepreneurial firms (Birch, 1987; McDougall et al. 1994).
Until now, it was assumed that ownership concentration reduced agency costs (Jensen and Meckling, 1976; Jensen, 1994). However, recent studies point out the existence of specific agency costs in the family firm derived from the conflicts of interests arising in these organisations as a result of self-control and altruism, which are two characteristics inherent to family firms (Schulze et al., 2002, 2003). Altruism is a trait that positively links the welfare of an individual to the welfare of others. Thus, in the family firm, the founder must choose between doing what is best for him, best for the family, and best for the firm. For example, the chief executive officer of a family firm might make the decision to retire conditional upon the suitability of a successor in terms of skills and experience – something that could lead him or her to reconsidering retirement altogether. Although this situation could be considered altruistic, it can have unfortunate consequences, because family heirs could be disappointed, and the firm's performance could deteriorate as a result (Schulze et al., 2002).The problem of self-control may occur when individuals establish their personal list of priorities and are strongly motivated by them. This creates an internal conflict, because they cannot possibly maximise different kinds of priority simultaneously (Thaler and Shefrin, 1981; Jensen, 1994).
The question of treating the effects as fixed or random is important when the estimates differ widely between the two models. The Hausman χ 2 statistic tests the null hypothesis that the estimates of the random and fixed effect models are not significantly different. Since there are no significant differences between them, only the results obtained with the random effect estimate are reported.
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Acknowledgements
The authors thank the editor, Professor José Manuel Campa, and the three anonymous reviewers for their comments and suggestions. This study has been supported by financial aid from the Spanish Ministry of Science and Technology, Project SEC2003-04070. The study is part of the research conducted by the Chair for Business Initiatives and Family Firms.
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Accepted by José Manuel Campa, Departmental Editor, 11 July 2005. This paper has been with the author for two revisions.
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Fernández, Z., Nieto, M. Impact of ownership on the international involvement of SMEs. J Int Bus Stud 37, 340–351 (2006). https://doi.org/10.1057/palgrave.jibs.8400196
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DOI: https://doi.org/10.1057/palgrave.jibs.8400196