Family business going abroad: the effect of family ownership on foreign market entry mode decisions

Abstract

Research on family firms’ internationalization is growing, but empirical findings are mixed. To reconcile prior studies, we focus on strategic decisions related to internationalization, specifically the foreign market entry mode selection process. We suggest that the choice about entry mode is especially significant for family owners because it may either align or conflict with two key family-related goals: maintaining family control and keeping a long-term orientation of the business. We argue that these goals have different weights within family firms according to differences in ownership structure, with significant implications for international strategic decisions. We rely on a sample of medium-sized family-owned Italian firms and show that different types of family ownership structures affect entry mode decisions differently and specifically influence the time horizon of the foreign investment and willingness to cooperate with external actors. We also provide empirical evidence that the presence of a non-family manager moderates the relationship between family ownership and entry mode decisions. Our study expands on prior research by highlighting how family firms enter foreign markets and pointing out the strategic implications of family firm heterogeneity.