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Title: How does family involvement affect a firm's internationalization? An investigation of Indian family firms
Authors: Ray, Sougata
Mondal, Arindam
Ramachandran, Kavil
Keywords: Ability and willingness perspective
Family ownership and management
Foreign institutional investors
Professionalization of family firms
Issue Date: 2018
Publisher: SCOPUS
Global Strategy Journal
Wiley-Blackwell Publishing Ltd
Series/Report no.: 8(1)
Abstract: Research Summary: We investigate whether and how family ownership and management influence firms' internationalization strategies in an emerging economy in which family firms are dominant. Anchoring on the willingness and ability framework and drawing on the socioemotional wealth perspective and agency theory, we theorize how the heterogeneity among family firms in their ownership structures, concentration, and family involvement in management shapes the firms' internationalization strategies. We also theorize how certain contingencies, such as the presence of foreign institutional ownership and family management, moderate the relationship between family ownership and internationalization strategy. We test our predictions by using a proprietary, longitudinal panel dataset of 303 leading family firms from India and find support for most of our theoretical predictions. Managerial Summary: Internationalization has emerged as a dominant strategy for firms in a globally interconnected world. We observe that ownership structure and management have significant bearing on internationalization strategies of family firms, as family owners and managers are more averse to internationalization. Family firms' aversion to internationalize is more pronounced when families can exercise greater control on firms' actions through the combined effect of higher family ownership (primarily through strategic control) and family's participation in management (through strategic, administrative, and operational control). However, certain contingencies, such as the higher ownership of foreign institutions and presence of professional managers, help business families improve their understanding of international markets, reduce the fear of the unknown, and better appreciate the benefits of internationalization, thereby aiding greater internationalization of family firms. Copyright � 2017 Strategic Management Society
Description: Ray, Sougata, Indian Institute of Management Calcutta, Kolkata, India; Mondal, Arindam, School of Management and Entrepreneurship, Shiv Nadar University, Greater Noida, India; Ramachandran, Kavil, Indian School of Business Hyderabad, Hyderabad, India
ISSN/ISBN - 20425805
DOI - 10.1002/gsj.1196
Appears in Collections:Strategic Management

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