A Longitudinal Investigation of Foreign Markets Entry and Survival in Family Firms

Abstract

Despite the benefits of international expansion, family firms are commonly portrayed as being conservative, risk averse, and therefore unwilling to assume the risks associated with international markets. However, some scholars have argued and empirically shown that family firms can be better able than their non-family counterparts to take advantage of the opportunities associated with internationalization. Our longitudinal analyses of 1,054 Spanish manufacturing firms from 1999-2012 show that preoccupation with failure in family firms elicits resistance to cognitive simplification and directs attention toward comprehending signals and threats from the organization’s environment, thereby forming the basis for mindful foreign market entry decisions. Mindful internationalization choices, in turn, enable family firms to endure longer than their non-family counterparts in the broached foreign markets. Furthermore, poor performance and organizational slack enhance the positive effect of family firms’ mindfulness on continued operation in foreign markets. This paper contributes new insights that reconcile prior research on family firms’ internationalization and its outcomes.