Family firms' international make-or-buy decisions: Captive offshoring, offshore outsourcing, and the role of home region focus

Abstract

International sourcing decisions have received increased attention by scholars and policymakers recently as they are important predictors of firms' international competitiveness. Building on the theoretical perspective of socioemotional wealth, we introduce the distinction between family and non-family firms as an overlooked variable able to explain heterogeneous international make-or-buy choices. Using a sample of 1180 European firms, we find that family firms are more likely to engage in captive offshoring (i.e., make strategy) rather than offshore outsourcing (i.e., buy strategy). Nonetheless, we find that family firms are more successful than non-family firms when undertaking offshore outsourcing, especially when sourcing is global rather than regional.