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When a high-quality niche strategy is not enough to spur family-firm internationalization: The role of external and internal contexts

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Abstract

While prior research suggests that family firms are risk-averse with regards to internationalization, Hennart et al. (J Int Bus Stud, 2017) show that family firms selling high-quality niche products internationalize as much as their nonfamily-firm counterparts. Our Counterpoint extends Hennart et al.’s (2017) thesis by suggesting that this effect is not universal but depends on the external context (country-of-origin pro-market development) and internal context (professionalization practices). Our study demonstrates that family firms selling high-quality niche products struggle to internationalize when they are from countries with weaker pro-market development. We also show that professionalization practices benefit family firms selling high-quality niche products abroad.

Résumé

Alors que des recherches antérieures suggèrent que les entreprises familiales sont peu enclines à prendre des risques en matière d’internationalisation, Hennart, Majocchi et Forlani (2017) montrent que les entreprises familiales qui vendent des produits de niche de haute qualité s’internationalisent autant que les entreprises non familiales. Notre contrepoint prolonge la thèse de Hennart et al. (2017) en suggérant que cet effet n’est pas universel, mais qu’il dépend du contexte externe (le développement pro-marché du pays d’origine) et du contexte interne (les pratiques de professionnalisation). Notre étude démontre que les entreprises familiales qui vendent des produits de niche de haute qualité ont du mal à s’internationaliser lorsqu’elles proviennent de pays dont le développement pro-marché est plus faible. Nous montrons également que les pratiques de professionnalisation profitent aux entreprises familiales qui vendent des produits de niche de haute qualité à l’étranger.

Resumen

Aunque las investigaciones anteriores sugieren que las empresas familiares son adversas al riesgo en relación con la internacionalización, Hennnart, Majocchi, y Forlani (2017) muestran que las empresas familiares que venden productos en nichos de alta calidad se internacionalización tanto como sus homólogas no familiares. Nuestro Contrapunto extiende la tesis de Hennart y sus colaboradores (2017) sugiriendo que este efecto no es universal, sino que depende del contexto externo (desarrollo pro mercado del país de origen) y contexto interno (practicas de profesionalización). Nuestro estudio demuestra que las empresas familiares que venden productos en nichos de alta calidad tienen dificultad en internacionalizarse cuando son de países con un desarrollo pro mercado débil. También mostramos que las practicas de profesionalización benefician las empresas familiares que venden sus productos en nichos de alta calidad en el extranjero.

Resumo

Embora pesquisas anteriores sugiram que empresas familiares sejam avessas a risco em relação à internacionalização, Hennart, Majocchi e Forlani (2017) mostram que empresas familiares que vendem produtos de nicho de alta qualidade se internacionalizam tanto quanto empresas não-familiares. Nosso contraponto estende a tese de Hennart et al. (2017) sugerindo que esse efeito não é universal, mas depende do contexto externo (desenvolvimento pró-mercado do país de origem) e do contexto interno (práticas de profissionalização). Nosso estudo demonstra que empresas familiares que vendem produtos de nicho de alta qualidade batalham para se internacionalizar quando são de países com desenvolvimento pró-mercado mais fraco. Também mostramos que práticas de profissionalização beneficiam empresas familiares que vendem no exterior produtos de nicho de alta qualidade.

摘要

虽然先前的研究表明, 家族企业在国际化方面规避风险, 但Hennart, Majocchi和Forlani (2017) 表明, 销售高质量独特产品的家族企业的国际化与它们非家族企业竞争对手一样多。我们的反观点延伸了Hennart等人 (2017) 的论点, 认为这种影响不是普遍的, 而是取决于外部情境 (原产国的亲市场发展) 和内部情景 (专业化实践) 。我们的研究表明, 销售高质量特殊产品的家族企业当它们来自亲市场发展较弱的国家时很难国际化。我们还表明, 专业化实践有利于在国外销售高质量特殊产品的家族企业。.

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ACKNOWLEDGEMENTS

We would like to thank Alfredo De Massis, Tommaso Minola, and the participants at research seminar series organized at the University of Bergamo, Florida Atlantic University, and the Free University of Bozen-Bolzano for their useful feedback on earlier versions of this manuscript. Professor Eddleston is grateful to the Schulze Foundation for its support. Professor Banalieva is grateful to the Gary Gregg Fellowship for its research support.

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  1. D’Amore-McKim School of Business, Northeastern University, 360 Huntington Avenue, 209 Hayden Hall, Boston, MA, 02115, USA

    Kimberly A Eddleston

  2. D’Amore-McKim School of Business, Northeastern University, 360 Huntington Avenue, 315 Hayden Hall, Boston, MA, 02115, USA

    Ravi Sarathy & Elitsa R Banalieva

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  1. Kimberly A Eddleston
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Correspondence to Kimberly A Eddleston.

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Accepted by Alain Verbeke, Editor-in-Chief, 24 September 2018. This article has been with the authors for one revision.

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Appendix A: Operationalization of the Control Variables

Appendix A: Operationalization of the Control Variables

Control variable

Survey question measure

R&D spending

“In fiscal year [insert last complete fiscal year], did this establishment spend on research and development activities, either in-house or contracted with other companies (outsourced)?”: 1 for “yes”; 0 for “no” (variable - ecao3-)

Average productivity

Natural log of “Average weekly hours of work of permanent, full-time production employees” (variable - moil12a1-) + ”Average weekly hours of work of permanent, full-time non-production employees” (variable - moil12a2 -)/2

Firm size

Natural log of “Permanent, full-time employees in the establishment at the end of last fiscal year” (variable - l1-) + ”Full-time seasonal/temporary employees employed in last fiscal year” (variable - l6-)

Firm age

Natural log of Firm Age, the number of years between the year the establishment of operations in the country and the year of the survey plus one (variable -b5-)

Subsidiary status

“Is this establishment part of a larger firm?” where 1 is for “yes” and 0 is for “no, it is a firm on its own” (variable -a7-)

Industry effects

Three industry dummies (two included in regressions) based on the single-digit United Nations ISIC Rev 3.1 classification (the first digit of variable -d1a2-)

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Eddleston, K.A., Sarathy, R. & Banalieva, E.R. When a high-quality niche strategy is not enough to spur family-firm internationalization: The role of external and internal contexts. J Int Bus Stud 50, 783–808 (2019). https://doi.org/10.1057/s41267-018-0199-8

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