Literature Reivew the Internationalization of Family Business

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The internationalization of Family Business: state-of-

the-art and comprehensive research framework

Leonardo Centeno-Caffarena (PhD student) Universitat Autònoma de Barcelona, Spain

[email protected]

Eduardo Bocatto (PhD student)

Universitat Autònoma de Barcelona, [email protected]

Abstract

The internationalization of the family business is a new and a very limited field of

study; this paper attempts to review all available literature on this topic. The study

shows that only 4 countries have partially being studied. At the current stage of

development, this field of research is presented with incomplete and fragmented

knowledge. That is why this contribution intends to gather the main ideas presented in

past research pointing out on potential lines for future research. A comprehensive

framework of Family Business Internationalization is presented.

Key words: Internationalization, family business, family firm, family business

internationalization, literature review.

INTRODUCTION

Family business (FB) is probably an old phenomenon, but it has been adopted by the

academia only two decades ago as an important and specific topic of research, bearing

in mind its importance in the economy of many countries as well as its particularities

(Cabrera-Suarez & García-Falcon, 1999; Ward, 1987; Harris et al., 1994), either by



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their number (Sharma, 2004: 3), their wealth creation, employment (Upton et al., 2001)

or competitiveness (Lee, 2004; Neubauer & Lank, 1998).

In Europe the majority of businesses are family-owned (Cromie et al., 1999) as well as

in the United States (Gersick et al., 1997); about 95% of businesses in the US are

family-owned (Gallo, 1995) as well as 60% of public businesses are controlled by same

family members. In the European context Austria (83.2%) and Germany (82%)

(Donckels & Frolich, 1991) lead the group, followed by United Kingdom with 76%

(Welsch, 1991) and Spain with 71% (Gallo & García Pont, 1989). In Europe the FB

field has been considered a priority by the proper authority (European Parliament, 2003:

132-134; European Economic and Social Committee, 2003: 17) because of the growing

interest from business associations, academy and institutions at different levels,

nationally and internationally (Veciana, 1999: 7).

The internationalization of the firm is one of the topics with most abundant research

(Rialp, Rialp & Knight, 2002: 1), but a very different situation is found in the field of

the internationalization of the family firm; reviewing the literature available, very little

information was available (theoretical and empirical studies) on FBs and

internationalization (Harju & Heinonen, 2004: 1-2; Okoroafo, 1999: 149; Davis &

Harveston, 1999) since the topic has not yet gained enough attention from the academia

(Okoroafo, 1999; Davis and Harveston, 2000; Zahra, 2003; Gallo & Pont, 1996: 1;

Gallo et al., 2004: 2).

The internationalization of a business is a way of expanding the business, at the same

time, allowing available family members to obtain new positions, which are an



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important objective of a FB, and to financially secure family members (Gallo et al.,

2004: 3).

The internationalization of a firm is a phenomenon that affects also the FB, as family

companies are active in the international arena (Harju & Heinonen, 2004: 2), that’s why

the aim of this study is to review the available literature on the topic of

internationalization of FB, to point on possible contradictions in the field, to propose

new research venue, and to offer a framework of study.

METHODOLOGICAL ISSUES

Initial search of existing literature on the topic of FB internationalization was conducted

by utilizing key words or phrases that best suited the proposed objective, they included:

‘family business/firm internationalization’, the ‘internationalization of the family

business/firm’, and ‘family firm internationalization’; related literature about ‘family

business/firm’ and ‘firm internationalization’ was also checked in order to find possible

papers of interest. We checked the web in Spanish, English, French, Italian, and

Portuguese languages, therefore our key words were translated into those languages.

The online search was carried out using scholar-google searcher

(www.scholar.google.com), ISI Web of Knowledge (http://portal.isiknowledge.com),

and the ABI/Inform (http://proquest.umi.com/login), all of them provided a list of

references for each paper selected.

After several days of search an initial list of about 50 papers was produced. The

following step was to establish a more rigorous selection criterion to identify the papers

that directly dealt with the topic of the Internationalization of FBs; the papers had to



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present the following requirements: (a) should include the aforementioned key words in

the title or abstract, or give a special consideration to the proposed topic, (b) must be

either published or hanged on the web as ‘working paper’, we did not consider papers

assembled specifically for conferences or workshops (a proactive more than a reactive

focus) (c) must have an empirical application or a strong theoretical background on FB

internationalization, (d) its main focus has to be the internationalization of the FB or

would add something to this discussion whether in the theoretical framework and/or in

the empirical conclusion, (e) case studies were not considered only if they add valuable

generic information to the topic either in the framework or in the conclusions; we did

not considered papers focusing on an ethnical group, because they were adding

knowledge to a specific form of FB, and we were more interested in building up on a

generic theory of the internationalization of FBs. For papers written by the same author,

applying the same format and content, with similar outcomes, and using the same data

base, we decided to select only the most recent publication; otherwise we felt the

information would be duplicated.

After applying the above criteria we finally concluded that 12 papers were the ones that

satisfy such requirements and decided to work with them; the main focus of

concentration in one of the papers was not the internationalization of the FB, but it is

one of the dimensions developed on it (Gallo, Tapies & Cappuyns, 2004: 314).

LITERATURE REVIEW

The field of the internationalization of the FB is a new area of research for the academia,

and there are not many contributions (Okoroafo, 1999; Davis & Harveston, 2000; Gallo

et al., 2000, Harju & Heinonen, 2004); the first paper that explicitly bear such title was



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written only 15 years ago (Gallo & Sveen, 1991); this seminal work is the most cited

effort, becoming an emblematic research for all the others to come. In Appendix 1 we

provide a chronological perspective of the theoretical and empirical studies selected and

developed during the last 15 years (1991-2005).

About 33% of the papers selected were written during the 90’s, and the rest (67%) in the

00’s, giving us an idea of the passive welcoming that the academia gave to this new

research avenue, probably because many researchers bear in mind that FBs are less

exporter than non-family ones . In the Spanish context, 5 research centers have shown

interest in the topic, orderly by date of involvement they are: University of Navarra

(IESE), Universidad Carlos III de Madrid, Universidad de Las Palmas de Gran Canarias,

Universidad de Jaen, and Universidad Autonoma de Barcelona (UAB).

ANALYSIS AND DISCUSSIONS OF THE REVIEWED RESULTS

Authors and publishers

Spain leads the research on the field of `family firm internationalization’ in many

aspects; the most prolific writer is Spaniard Professor Gallo with 4 papers on his behalf;

in general, Spanish researchers account for 47.6% from a total of 21 accounted. The

most studied country was also Spain with 50% of the papers based on samples coming

from this country, followed by the United States with 30%, and both Australia and

Finland with 10% each.

The main source of publication has been the Family Business Review, the leading

journal on the field of family business, accounting for 58.3% of the papers; 25% of the

documents are still on a ‘working paper’ format coming from different universities.



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Research objectives and types of research

All the studies selected in our research have several aspects in common; first of all, they

imply that there is a phenomenon to be understood (internationalization), that there are

key elements that affect it, and that there are some individuals that exert a strong

influence in the process (family); that is why there is a tendency to take three basic

avenues: study the phenomenon as a process, establish key elements that affect such

process, or study the influence of the owner family in the process.

To facilitate the above, the different research objectives of the papers selected can be

divided into three categories: (a) those that study the internationalization process of the

FB by contrasting it with non-family counterparts, the objective is to extract the main

ideas and concepts; a total of five papers fall into this category, Swinth & Vinton, 1993;

Okoroafo, 1999; Graves & Thomas, 2004; Gallo, Tapies & Cappuyns, 2004; and

Cabrera-Suarez & Olivares-Mesa, 2005; (b) those that study the FB internationalization

process by establishing key factors/elements that either foster/promote or restrain/hinder

such process, 3 works fall into this category, Gallo & Sveen, 1991; Gallo & Garcia-Pont,

1996; and Cabrera-Suarez & Olivares-Mesa, 2005; and (c) those that study the

internationalization of the FB by analyzing the involvement of the owner family in such

process, Zahra, 2003; Harju & Heinonen, 2004; and Cabrera-Suarez & Olivares-Mesa,

2005.

Regarding the type of research, the papers can be divided into 2 categories: those with a

theoretical focus and those with an empirical one. In the first group, 2 studies (16.67%)

are found: Gallo & Sveen, 1991 and Swinth & Vinton, 1993, coincidently these are the



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first two papers that were published in the field, which facilitated the empirical

contributions of the others to come. Due to the fact that in 1990 there was nothing

written on the internationalization of the FB, in order to create the most basic theory on

it, these two articles extrapolated concepts from both fields: the “internationalization of

the firm” and the “family business”. The first article identifies success factors

considered to be key elements in the internationalization process of the FB (Gallo &

Sveen, 1991: 181) and the second one demonstrates that success increased when an

international joint venture was created by partners that were both family-owned

businesses (Swinth & Vinton, 1993: 19).

In the second group are the empirical contributions (83.33%), which analyze firms from

specific countries with an already established framework; so far, only samples coming

from 4 different countries have being considered in the studies (Spain, United States,

Finland, and Australia). This opens new opportunity for novel researchers interested in

entering into this field.

Theoretical framework

Definitions

Only the seminal theoretical contribution by Gallo and Sveen (1991) defined what a

“family business” is, “a business where a single family owns the majority of stock and

has total control” (1991: 181); about the “internationalization of the firm”, two

contributions developed a referential definition: Gallo and Sveen (1991: 182) and

Okoroafo (1999: 147). The rest of the reviewed papers do not use definitions to develop

their research.



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We foresee some difficulties in this new field of study, due to the diversity of opinions

offered by both areas, FB and the internationalization of the firm. The FB field lacks

consensus on what is a FB, resulting in businesses that can range from a single

employee up to very large corporations with thousands of employees, while firm

internationalization is a highly segmented field (key factors, process, modes of entry,

etc.). All the above could be a potential source for misleading information when

building scientific research.

In most of the papers reviewed there is no clarity regarding theories or frameworks

proposed to develop later the empirical work, and at times the reader has to estimate the

authors’ theoretical orientation; is common to find papers (specially early ones) without

a proper theoretical base, and only with a set of cites and quotes to the areas of the

interest of the author.

The field most widely used to build the FB internationalization theory, is the FB field

itself; from the selected articles, there are eight aspects studied regarding it: general

aspects about FB (Gallo & Garcia-Pont, 1996, Okoroafo, 1999; Harju & Heinonen,

2004), the internationalization of the FB (Gallo & Sveen, 1991, Gallo et al., 2004),

ownership (Gallo & Sveen, 1991; Zahra, 2003), company culture (Gallo & Sveen, 1991;

Swinth & Vinton, 1993), groups (Swinth & Vinton, 1993), family business system

(Swinth & Vinton, 1993), family involvement (Zahra, 2003), and stewardship

perspective (altruism) (Zahra, 2003: 510).

The internationalization of the firm is the second most popular field used to develop the

theoretical part of the papers selected; there are in total five features of the



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internationalization that are regarded, literature review (Okoroafo, 1999, Graves &

Thomas, 2004; Cabrera-Suarez & Olivares-Mesa, 2005), the different theories of

internationalization (Gallo & Garcia-Pont, 1996) the eclectic model (Davis & Harveston,

2000; Fernandez & Nieto, 2005), the sequential model (Uppsala) (Davis & Harveston,

2000; Fernandez & Nieto, 2005), and joint ventures (Swinth & Vinton, 1993).

Other important fields used are the strategic management area, studied five times:

general aspects about strategic management (Gallo & Sveen, 1991), strategic alliances

(Gallo et al., 2004; Harju & Heinonen, 2004), firm strategic risk (Zahra, 2003), and

international strategy joint venture (Swinth & Vinton, 1993); and the resource based-

view approach used in three studies (Davis & Harveston, 2000, Zahra, 2003; Fernandez

& Nieto, 2005).

The field of small and medium size firm (SME) is only developed by two authors (Gallo

& Garcia-Pont, 1996; Okoroafo, 1999), as well as organizational learning (Davis &

Harveston, 2000; Fernandez & Nieto, 2005).

The less used theories are the empirical financial structure and policies (Gallo, Tapies &

Cappuyns, 2004), the organizational structure (Gallo & Sveen, 1991), and firm life

cycle stage (Gallo & Sveen, 1991).

Four of the papers do not use dependent variables (Gallo & Sveen, 1991; Swinth &

Vinton, 1993; Gallo & Garcia-Pont, 1996; Gallo et al., 2004), the first two, are justified

by their theoretical orientation; those that do so, use the extent of internationalization

(Okoroafo, 1999), international sales (Davis & Harveston, 2000), firm



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propensity/intensity to export (Fernandez & Nieto, 2000), international sales (Zahra,

2003), degree of internationalization (export intensity) (Gaves & Thomas, 2004), share

of export of total turnover and main market area (Harju & Heinonen, 2004), firm’s

propensity to export/export intensity (Fernandez & Nieto, 2005), by categorizing firms

as non-exporters, indirect exporters, and direct exporters (Cabrera-Suarez & Olivares-

Mesa, 2005).

Propositions and hypothesis

In half of the papers there are no propositions or hypothesis to be tested, specially

among the early ones; the first four papers does not use them (Gallo & Sveen, 1991;

Swinth & Vinton, 1993; Gallo & Garcia-Pont, 1996; Okoroafo, 1999), and only one of

the papers test propositions (Gallo et al., 2004).

The paper with the most number of hypotheses is Davis & Harveston (2000) and the

ones with the least are Grave & Thomas (2004) and Cabrera-Suarez & Olivares-Mesa

(2005); the average number of hypothesis or propositions used are four; and none of

Gallo’s papers present any hypothesis, one of them uses propositions (Gallo et al.,

2004).

Use of theoretical models

When a new field of research is being proposed the development of a research

framework is of essence to direct future research. Nevertheless, in this new field of

research theoretical models are generally unused; the only paper that proposes a model

for the development of the topic selected is Gallo, Tapies & Cappuyns (2004: 316).



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MAIN CONCLUSIONS

FB internationalization as a process

After reviewing the main export development process phase-models, regardless the

differences among them as to the number, nature and content of the stages, a study

concluded that the typical process can be summarized into three broad phases: a) the

pre-engagement phase, when the firm whether sells goods solely in the domestic market

and is not interested in exporting, or exported in the past but no longer do so; b) the

initial phase, when the firm is involved in sporadic export activity and has the potential

to increase its overseas involvement but not the capacity to cope with the demands

perceived, leading to marginal export behavior or withdrawal from selling abroad

altogether; and c) the advanced phase, when the firm is a regular exporter with

extensive overseas experience (Cabrera-Suarez & Olivares-Mesa, 2005: 6).

FBs enter both phases of the international process later than non-family ones, because

of their risk-averse behavior due to the concentration of the family wealth in the

business or resistance to changes in the cultural or structural patterns usually associated

with the internationalization process; the average age at which a FB enter the advanced

phase is 38.2 years, and it is highly probable that it is being managed by the second

generation, which is usually associated with cultural, structural and strategic changes

from the younger family members who can promote that internationalization process

(Cabrera-Suarez & Olivares-Mesa, 2005: 15-16).

FBs versus non-family ones

Some of the studies accounted, refer to several differences between FBs and non-family

ones; the main aspects refer to their lower degree of international involvement



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(Fernandez & Nieto, 2005: 83), specially among SMEs (Graves & Thomas, 2004: 20);

in the northwest Ohio FBs SMEs export less than all firms (51% vs. 60%) (Okoroafo,

1999: 154-155), confirming the linkage between FB status (ownership) and exporting

status (Graves & Thomas, 2004: 20).

FBs are smaller in size (Grave & Thomas, 2004: 20), and their average sales are

substantially smaller than NFBs (by 45%) (Gallo, Tapies & Cappuyns, 2004: 306); also

they grow slower (or do not want to grow as much as they could if hey used all the

available resources (Gallo, Tapies & Cappuyns, 2004: 315) in both domestic and

international sales and in equity (Okoroafo, 1999: 154-155), probably because they

show a more rigid behavior (Gallo & Sveen, 1991: 181). Once the SME FB initiates the

internationalization of its operations, there is no marked difference in

internationalization progress compared to non ones, so there greatest challenge is

initiate such process (Graves & Thomas, 2004: 20).

The above results were found not to be consistent in all places because a more recent

study across Finish SMEs demonstrated that FBs where even more internationalized

than other businesses when assessing both export activities and main market areas

(Harju & Heinonen, 2004: 11).

Exporting FBs are typically initially motivated by unsolicited orders from foreign

customers, and not as a part of a previous planned strategy from them, because they do

not monitor regularly the international market place (Okoroafo, 1999: 154).



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About the age of the family SMEs, a study found no significant differences (Graves &

Thomas, 2004: 20); but another study found an average of 8 years difference between

FBs and non-family (Gallo, Tapies & Cappuyns, 2004: 315);

From a relational perspective, FBs are less likely to engage in networking with other

businesses, and struggle in their internationalization process due to their more inward

looking perspective and lacking the relationships required to expand internationally;

Grave & Thomas (2004) appeal to several authors when stressing in the lack of

resources required for international expansion show by FBs, such as managerial

capability which is essentially for growth strategies such as expanding internationally

(Boeker & Karichalil, 2002; Flamholtz, 1986; Hoy & Verser, 1994; Levinson, 1971;

Dyer, 1989). Such relationships could assist the firm in accessing market knowledge,

international contacts and resources and capabilities required for it international

expansion (Graves & Thomas, 2004: 20).

Key Factors that influence the international performance of FBs

Several articles (4) considered in this literature review, recognized the importance of

key factors that influence, facilitate or restrain, the internationalization expansion

process of FBs (Gallo & Sveen, 1991: 181; Fernandez & Nieto, 2005: 83; Cabrera-

Suarez & Olivares-Mesa, 2005: 16; Davis & Harveston, 2000: 116), three of them from

Spain; the successful implementation of these factors seems to accelerate the entrance in

foreign markets (Cabrera-Suarez & Olivares-Mesa, 2005: 17) and could encourage the

firm’s international expansion (Fernandez & Nieto, 2005: 83), but will depend on the

firm’s awareness of such facilitator or restraining factors (Gallo & Sveen, 1991: 181).



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According to the results found, we divided these factors into two groups, the external

and internal ones; the first group refers to the industry context where the firm moves

into (Cabrera-Suarez & Olivares-Mesa, 2005: 17). The second set of factors refers to the

internal context and some authors suggest that the focus on internal factors provides a

better explanation than external ones about the internationalization and sales growth

among FBs (Gallo & Pont, 1996; Davis & Harveston, 2000: 116). Considering the

information obtained from other researchers it comprises strategic planning aspects

(Gallo et al., 2004: 13), firm size (Cabrera-Suarez & Olivares-Mesa, 2005: 16;

Fernandez & Nieto, 2005: 85), organizational culture represented by the personal

characteristics of the founder (Gallo, Tapies & Cappuyns, 2004: 313), his/her age and

formal education (Davis & Harveston, 2000: 116), their managerial attitude (Gallo &

Garcia-Pont, 1996: 58), their commitment to export or propensity to international

involvement (Fernandez & Nieto, 2005: 85) and the involvement of the family

(“familiness”) (Zahra, 2003: 507).

Industry context

The speed of a firm’s internationalization is influenced by the industry in which it

belongs. Manufacturing food, beverage and tobacco firm products are the slowest,

especially if they are family-owned. Food is a product that does not internationalize

quickly due to its different consumption patterns and tastes among countries (Cabrera-

Suarez & Olivares-Mesa, 2005: 17).

Contact with foreign suppliers is also one of the most significant motivations for an

early entry in both phases, measured by import intensity, where a firm starts its

internationalization by purchasing machinery, raw materials and components from



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abroad, and only after that it does moves on to the outward side; this result demonstrates

that inward and outward internationalization are interrelated process through which

companies become involved (Cabrera-Suarez & Olivares-Mesa, 2005: 16).

The effective establishment of strategic alliances as a vehicle for internationalization

requires the selection of the right partners and demands commitment, certain

management capabilities and trust that the partners will maintain a relationship

consistent with the ownership structure and development of the FB (Gallo et al., 2004:

14).

Internal factors

In the strategic planning side there are two significant contributions; one refers to three

critical variables that together drive the internationalization process: (a) to possess a

product whose potential exceeds that of the local market, (b) the desire to grown the

company, and (c) an organization structure that would enable growth (Gallo et al., 2004:

13), and the other one establishing two sets of important fostering factors that develop

the internationalization process of FBs, marketing aspects (price flexibility, advertising

intensity, product diversification), and aspects regarding production (product

standardization, and large scale production) (Cabrera-Suarez & Olivares-Mesa, 2005:

17); this last research also found a positive relationship between the wide spectrum of

products that a FB sells directly in the domestic market, and its late entrance into the

advanced phase of the export process (Cabrera-Suarez & Olivares-Mesa, 2005: 16).

The strategic orientation of products for local markets coupled with inadequate level of

technology influence negatively FBs internationalization (Gallo & Garcia-Pont, 1996:



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57); the opposite was probed true in a study among entrepreneur-led FBs, when

internationalization and sales growth were positively affected by the increased use of

the technology, particularly Internet usage and increased investments in information

technology (Davis & Harveston, 2000: 116 -118).

Another study found that commitment to innovation is persistently and positively

statistically associated with the propensity for and extent of internationalization (Graves

& Thomas, 2004: 20); FBs consider introducing major innovations a risky activity, and

that is why they avoid or delay their entry into international markets (Cabrera-Suarez &

Olivares-Mesa, 2005: 17); in other occasions FBs do not perceived the need to innovate

to approach international markets, because they are already habituated to the local

market’s acceptance and recognition of their products or brands (Cabrera-Suarez &

Olivares-Mesa, 2005: 16).

The investment of another company (as a large-block shareholder) in a family SME has

a positive effect on its export propensity (Fernandez & Nieto, 2005: 85)

The size of the firm has a statistically significant association with early entry into both

phases of the export development process; size is relevant both for family and for non-

family businesses (Cabrera-Suarez & Olivares-Mesa, 2005: 16), and it is also positively

related to the decision to expand to foreign markets (Fernandez & Nieto, 2005: 85)

The personal characteristics of the FB founder dictates a particular way of doing

business (Gallo, Tapies & Cappuyns, 2004: 313), but also his/her age and formal

education (Davis & Harveston, 2000: 116) and managerial attitude (Gallo & Garcia-



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Pont, 1996: 58); the level of age and formal education of the entrepreneur-owner have a

significant relationship to internationalization and sales growth; therefore aging appears

to suppress sales growth, and contrary to higher education attained by the entrepreneur,

which has a positive effect on both internationalization and sales growth (Davis &

Harveston, 2000: 116).

Managerial attitudes in developing foreign business influences positively FBs

internationalization (Gallo & Garcia-Pont, 1996: 58), and also is mentioned the high

level of personal commitment to the process, combined with self confidence and the

necessary managerial capabilities to internationalize quickly and effectively (Gallo et al.,

2004: 14). A family SME is encouraged to commit into export propensity/international

involvement when it enter into alliances with other family-owned firms (Fernandez &

Nieto, 2005: 85)

Regarding the involvement of the family, it has mixed effects on internationalization;

such involvement is positively and significantly associated with internal sales and

negative effect on the number of countries entered (Zahra, 2003: 507); ownership was

found to be a significant variable that determines the degree and geographic scope of

internationalization; ownership and family involvement interact positively and

significantly to influence internationalization (Zahra, 2003: 507).

‘Familiness’ cannot be considered as a special strength for an internationalizing family

company, and before the phenomenon of internationalization it can become a strong

point of disagreement within the family, in some cases it may even disintegrate the

family (Harju & Heinonen, 2004: 11).



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The literature conclude that the 1st and 2nd generations of FBs are slower at

internationalize than NFBs (Gallo & Sveen, 1991: 189), but if they do not get involved

in foreign activities in the 1st and 2nd generation, it is unlikely that they do so in the

following ones (Okoroafo, 1999: 154); this is consistent also with other research on

family SMEs that concluded that second and subsequent generations are concerned with

international markets and encouraged the international involvement (export propensity)

and strongly commit to them (Fernandez & Nieto, 2005: 85). The previous idea is due

to the negative relationship between family ownership and international involvement

(export propensity and intensity), but it becomes positive in second- and subsequent-

generation family SMEs (Fernandez & Nieto, 2005: 84-85).

CONCLUDING REMARKS AND IMPLICATIONS

Theoretical Model

Considering that only one of the papers studied before proposed a theoretical model,

which by the way, is the only paper included whose main focus of concentration is not

specifically the internationalization of the FB (Gallo, Tapies & Cappuyns, 2004: 316)

the authors decided to include one contribution and built a comprehensive model to

study the internationalization of the FB, which definitely has to be tested in future

empirical researches.



Figure 1Integrative Model for Internationalization of FBs

Source: Adapted from Le Breton-Miller et al. (2004) and Li et al. (2004)

The components of the model can be summarized as follows: Non-family context

includes the industry context, where the firm is found, the competitive structure of the

industry and the regulations imposed to the industry are constrain and drives of a firms

strategy, organization and governance policies. The FB itself impacts the

internationalization process by virtue of the strategy that it follows; ownership structure

will also influence the internationalization process, if the CEO or director of the

company is the founder, second, third, and so forth generations may influence the desire

Industry Context (type of industry, competitive structure, regulation…)

FB Context

• ownership structure (controlling owner, sibling partnership, cousin consortium)

• CEO education level

• previous international experience

• strategic planning

• organizational culture and design

• FB size

Social Context (Culture, social norms, ethics, religion, laws...)

Family Context

• family dynamics (quality of relationship, trust, openness, shared values, respect,…)

• family influence on business decisions, commitment to the business, importance of family funding

Internationalization Process

MotivationMarket-seeking;Customer-following;Technology-acquiringCorporate CompetenceTechnology;Information capabilities;International experience;Entrepreneurship

Market Research

Market Selection

Market Entry Mode

Low level of involvementand risk (e.g. export/sales agent)

Intermediate level ofinvolvement and risk(e.g. joint Venture)

High level of involvementand risk (e.g. subsidiary)

Time and Timing

Performance/Evaluation - Feedback

Ant ecedentsPlanning

Execution



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and competence to internationalize. The level of education and previous international

experience, which is found to be higher in the generations after the founder, is also an

important aspect to determine the internationalization of the FB. The characteristics of

the director/CEO will also be a critical factor, with management ability, experience,

motivation, age, and others.

The social context is an external factor that may play an important role in the

internationalization of the FB, not only the social context of where the firm is found, but

also the social context where the firm will internationalize to. Culture, social norms,

ethics, religion, laws may have a direct or indirect influence on the internationalization

process as well as in the mode of entry. The family context which is influenced by the

social context may, depending on its dynamics and influence on business decisions will

affect the internationalization process.

At the heart of the model the internationalization process is found. A firm’s

internationalization process is comprised of three major phases: antecedents, planning

and execution (Li et al., 2004). The antecedents phase is characterized by the firm’s

motivation to: (1) seek new markets where it identifies good potential for expansion; (2)

follow its customers, since in a globalized market new emerging customers may appear

in different countries or regions (e.g. a successful product or service in Spain may

generate new customers in South America); and (3) acquire technology. The Antecedent

phase also complies corporate competence in terms of technology, innovation

capabilities, international experience and entrepreneurial thinking. The Planning phase

is composed of market research, market selection, and market entry mode. Good

understanding of the entering market’s culture, tastes, legislation, etc. play an important



21

role in the internationalization process and the chosen mode of entry. Finally, the

execution process is related to the chosen mode of entry which will determine the level

of involvement in the entering market.

Performance evaluation and feedback are very important to measure the effectiveness of

the internationalization, to identify possible corrections needed, and future strategies to

be made. The length of time that a FB takes to internationalize is an important issue that

has been previously studied and that may influence the failure or success of the

internationalization. Timing is also an important factor that has not received attention by

researchers on FB internationalization, finding the right moment, both in terms of

internal company structure and readiness of the receiving market may be a key issue for

its effectiveness.

Future research

The internationalization of FBs provide a new and vast frontier of possibilities for

research; among them future research should address the differences between family

and non family firms not yet considered in the previous studies, specially in

generational evolution aspects and cultural and governance patterns and using

alternative methods for data gathering, such as specific surveys or interviews that can be

useful for this purpose (Cabrera-Suarez & Olivares-Mesa, 2005: 17)

‘Familiness’ and the emergence of family disagreement in the context of FB

internationalization deserve also to be further studied under a qualitative approach in

both, SMEs (the somewhat dominant role of the owner-manager) and in larger family

companies, stressing on the sources and reasons of disagreement (Harju & Heinonen,

2004: 11).



22



23

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Conference/congress papers and thesis (not published)

Ariño, A.; Cappuyns, K.; Gallo, M. y Máñez, I. (2000): “El proceso deinternacionalización avanzado de las empresas familiares: involucración de lasempresas familiares en alianzas estratégicas”. I Congreso Nacional deInvestigación sobre la Empresa Familiar, Instituto de Investigación de la EmpresaFamiliar. Valencia, septiembre, pp. 375-399.

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Nieto, M. (1999): “Decisiones estratégicas de la empresa familiar: innovación eInternacionalización”. IX Congreso Nacional ACEDE. Burgos. 12, 13 y 14 deSeptiembre.

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empresas Familiares españolas”, XIV Congreso ACEDE, Conocimiento yCompetitividad, Murcia, 19-21 de Septiembre.







Author/Year Theory Applied

Gallo & Sveen (1991) Key aspects of FBI, strategic management model of Hax & Majluf (1984), FB (ownership, andcompany culture), organizational structure, firm life cycle stage (p. 182-188)

Swinth & Vinton (1993) Brief literature review on international joint venture, FB’s theory (groups, FB system, culture,strategic issues of FBs in international joint ventures) (p. 20-26)

Gallo & Garcia-Pont (1996) Literature review on the different theories on internationalization of firm, as well as consideringdifferent countries and sectors, and the way it is measured; also the particularities of FBs and SMEs

(p. 148-149)Okoroafo (1999) Literature review on the internationalization of the firm, FB and small firms (p. 148-150)

Davis & Harveston (2000) The eclectic model, resource-based view (RBV), organizational learning, and sequential model(Uppsala) (p. 3-5)

Zahra (2003) Literature review on intangible resources, stewardship perspective, altruism, strategic risk,ownership, and family involvement (p. 498-500)

Gallo, Tapies & Cappuyns(2004)

Literature review of empirical financial structure and policies (6 researches) p. 304

Gallo, Ariño, Máñez &Cappuyns (2004)

A brief literature review of FBI papers, FB literature (focus on generation propensity tointernationalize), and strategic alliances (p. 2-3)

Graves & Thomas (2004) Literature review on 4 perspectives of internationalization (economic, process, relational, andcapabilities) (p. 9-11)

Harju & Heinonen (2004) Strategic alliances and studies on FB

Fernandez & Nieto (2005) Eclectic, resource-based view (RBV), organizational learning, and sequential model (Uppsala) (p.78-80)

Cabrera-Suarez & Olivares-Mesa (2005)

Based on other studiesInternational studies

Bibliographic sources of FBs internationalization studies

Source of publication Number of

papers

includedFamily Business Review 7

Working Paper 3

Journal of Business Venturing 1

International Journal Globalisation& Small Business 1

Total 12

Documents

Literature Reivew the Internationalization of Family Business