International Expansion and Firm Growth in Domestic Markets: Family Versus Non-Family Firms

Abstract

This study examines the effects of international expansion on domestic growth in family firms (FFs) versus non-FFs. Integrating international business research into socioemotional wealth (SEW) theory, we argue that FFs seek to compensate for SEW losses (as implied by foreign direct investments) with SEW gains (associated with domestic growth). We claim that FFs are less prone to substitute home businesses with foreign activities and more likely to move back resources to foster domestic growth. Geographical diversification and modes of entry foster FFs’ domestic growth to an even greater extent. A test conducted on Italian firms supports these hypothesized effects.