Beyond economic considerations: The role of socioemotional wealth in family firm foreign exit decisions

Abstract

Previous research has delved into both economic and non-economic determinants influencing foreign exits, yet the role of socioemotional wealth (SEW) in this strategic decision of family firms has been underexplored. Our study addresses this oversight by examining three principal dimensions from the FIBER SEW framework: family control (F), binding social ties (B), and the renewal of family bonds (R). We utilise a probit model to analyse data from Chinese listed family multinational corporations spanning 2008 to 2019. Our analysis yields two primary insights. Firstly, the presence of family directors and international experience collectively diminish the probability of foreign exits. Secondly, our findings do not indicate gender differences among successors as influencing foreign exits. Notably, the association between poor performance and foreign exits becomes attenuated with an increase in the number of family directors and their international experience, and in scenarios involving male successors. These insights significantly enrich our theoretical comprehension of how SEW dimensions inform strategic decision-making regarding foreign exits in family enterprises.