Advertisement

Journal of International Business Studies

, Volume 50, Issue 5, pp 783–808 | Cite as

When a high-quality niche strategy is not enough to spur family-firm internationalization: The role of external and internal contexts

  • Kimberly A EddlestonEmail author
  • Ravi Sarathy
  • Elitsa R Banalieva
COUNTERPOINT

Abstract

While prior research suggests that family firms are risk-averse with regards to internationalization, Hennart et al. (J Int Bus Stud, 2017) show that family firms selling high-quality niche products internationalize as much as their nonfamily-firm counterparts. Our Counterpoint extends Hennart et al.’s (2017) thesis by suggesting that this effect is not universal but depends on the external context (country-of-origin pro-market development) and internal context (professionalization practices). Our study demonstrates that family firms selling high-quality niche products struggle to internationalize when they are from countries with weaker pro-market development. We also show that professionalization practices benefit family firms selling high-quality niche products abroad.

Keywords

internationalization small and medium-sized enterprises (SMEs) family versus nonfamily firms product quality country-of-origin pro-market development professionalization 

Résumé

Alors que des recherches antérieures suggèrent que les entreprises familiales sont peu enclines à prendre des risques en matière d’internationalisation, Hennart, Majocchi et Forlani (2017) montrent que les entreprises familiales qui vendent des produits de niche de haute qualité s’internationalisent autant que les entreprises non familiales. Notre contrepoint prolonge la thèse de Hennart et al. (2017) en suggérant que cet effet n’est pas universel, mais qu’il dépend du contexte externe (le développement pro-marché du pays d’origine) et du contexte interne (les pratiques de professionnalisation). Notre étude démontre que les entreprises familiales qui vendent des produits de niche de haute qualité ont du mal à s’internationaliser lorsqu’elles proviennent de pays dont le développement pro-marché est plus faible. Nous montrons également que les pratiques de professionnalisation profitent aux entreprises familiales qui vendent des produits de niche de haute qualité à l’étranger.

Resumen

Aunque las investigaciones anteriores sugieren que las empresas familiares son adversas al riesgo en relación con la internacionalización, Hennnart, Majocchi, y Forlani (2017) muestran que las empresas familiares que venden productos en nichos de alta calidad se internacionalización tanto como sus homólogas no familiares. Nuestro Contrapunto extiende la tesis de Hennart y sus colaboradores (2017) sugiriendo que este efecto no es universal, sino que depende del contexto externo (desarrollo pro mercado del país de origen) y contexto interno (practicas de profesionalización). Nuestro estudio demuestra que las empresas familiares que venden productos en nichos de alta calidad tienen dificultad en internacionalizarse cuando son de países con un desarrollo pro mercado débil. También mostramos que las practicas de profesionalización benefician las empresas familiares que venden sus productos en nichos de alta calidad en el extranjero.

Resumo

Embora pesquisas anteriores sugiram que empresas familiares sejam avessas a risco em relação à internacionalização, Hennart, Majocchi e Forlani (2017) mostram que empresas familiares que vendem produtos de nicho de alta qualidade se internacionalizam tanto quanto empresas não-familiares. Nosso contraponto estende a tese de Hennart et al. (2017) sugerindo que esse efeito não é universal, mas depende do contexto externo (desenvolvimento pró-mercado do país de origem) e do contexto interno (práticas de profissionalização). Nosso estudo demonstra que empresas familiares que vendem produtos de nicho de alta qualidade batalham para se internacionalizar quando são de países com desenvolvimento pró-mercado mais fraco. Também mostramos que práticas de profissionalização beneficiam empresas familiares que vendem no exterior produtos de nicho de alta qualidade.

摘要

虽然先前的研究表明, 家族企业在国际化方面规避风险, 但Hennart, Majocchi和Forlani (2017) 表明, 销售高质量独特产品的家族企业的国际化与它们非家族企业竞争对手一样多。我们的反观点延伸了Hennart等人 (2017) 的论点, 认为这种影响不是普遍的, 而是取决于外部情境 (原产国的亲市场发展) 和内部情景 (专业化实践) 。我们的研究表明, 销售高质量特殊产品的家族企业当它们来自亲市场发展较弱的国家时很难国际化。我们还表明, 专业化实践有利于在国外销售高质量特殊产品的家族企业。.

Notes

ACKNOWLEDGEMENTS

We would like to thank Alfredo De Massis, Tommaso Minola, and the participants at research seminar series organized at the University of Bergamo, Florida Atlantic University, and the Free University of Bozen-Bolzano for their useful feedback on earlier versions of this manuscript. Professor Eddleston is grateful to the Schulze Foundation for its support. Professor Banalieva is grateful to the Gary Gregg Fellowship for its research support.

Supplementary material

41267_2018_199_MOESM1_ESM.docx (18 kb)
Supplementary material 1 (DOCX 18 kb)

REFERENCES

  1. Alessandri, T., Cerrato, D., & Eddleston, K. 2018. The mixed gamble of internationalization in family and nonfamily firms: The moderating role of organizational slack. Global Strategy Journal, 8: 46–72.Google Scholar
  2. Almodóvar, P., Verbeke, A., & Rodríguez-Ruiz, O. 2016. The internationalization of small and medium-sized family enterprises – The role of human asset quality. Journal of Leadership & Organizational Studies, 23(2): 162–174.Google Scholar
  3. Arregle, J.-L., Duran, P., Hitt, M., & van Essen, M. 2017. Why is family firms’ internationalization unique? A meta-analysis. Entrepreneurship Theory and Practice, 41(5): 801–831.Google Scholar
  4. Banalieva, E., Eddleston, K., & Zellweger, T. 2015. When do family firms have an advantage in transitioning economies? Strategic Management Journal, 36: 1358–1377.Google Scholar
  5. Banalieva, E. R., Cuervo-Cazzura, A., & Sarathy, R. 2018. Dynamics of pro-market institutions and firm performance. Journal of International Business Studies, 49(7): 858–880.Google Scholar
  6. Banalieva, E. R., & Dhanaraj, C. 2013. Home-region orientation in international expansion strategies. Journal of International Business Studies, 44(2): 89–116.Google Scholar
  7. Bhaumik, S., & Dimova, R. 2014. Good and bad institutions: Is the debate over? Cross-country firm-level evidence from the textile industry. Cambridge Journal of Economics, 38: 109–126.Google Scholar
  8. Binz, C., Hair, J., Pieper, T., & Baldauf, A. 2013. Exploring the effect of distinct family firm reputation on consumers’ preferences. Journal of Family Business Strategy, 4(1): 3–11.Google Scholar
  9. Bloom, N., Sadun, R., & Van Reenen, J. 2012. Americans do IT better: US multinationals and the productivity miracle. American Economic Review, 102(1): 167–201.Google Scholar
  10. Boermans, M., & Roelfsema, H. 2013. The effects of managerial capabilities on export, FDI and innovation: Evidence from Indian firms. Asian Business & Management, 12(4): 387–408.Google Scholar
  11. Carroll, G. 1985. Concentration and specialization: Dynamics of niche width in populations of organizations. American Journal of Sociology, 90: 1262–1283.Google Scholar
  12. Chamberlain, G. 1980. Analysis of covariance with qualitative data. Review of Economic Studies, 47: 225–238.Google Scholar
  13. Chang, S.-J., & Shim, J. 2015. When does transitioning from family to professional management improve firm performance? Strategic Management Journal, 36(9): 1297–1316.Google Scholar
  14. Chen, J., Saarenketo, S., & Puumalainen, K. 2016. Internationalization and value orientation of entrepreneurial ventures – A Latin American perspective. Journal of International Entrepreneurship, 14(1): 32–51.Google Scholar
  15. Choi, D. S., Michell, P., & Palihawadana, D. 2008. Exploring the components of success for the Korean chaebols. Journal of Business & Industrial Marketing, 23(5): 311–322.Google Scholar
  16. Ciravegna, L., Lopez, L., & Kundu, S. 2014. Country of origin and network effects on internationalization: A comparative study of SMEs from an emerging and developed economy. Journal of Business Research, 67(5): 916–923.Google Scholar
  17. Craig, J., Dibrell, C., & Davis, P. 2008. Leveraging family-based brand identity to enhance firm competitiveness and performance in family businesses. Journal of Small Business Management, 46(3): 351–371.Google Scholar
  18. Cuervo-Cazurra, A., & Dau, L. 2009. Structural reform and firm exports. Management International Review, 49(4): 479–507.Google Scholar
  19. d’Astous, A., & Ahmed, S. 1999. The importance of country images in the formation of consumer product perceptions. International Marketing Review, 16(2): 108–126.Google Scholar
  20. De Massis, A., Frattini, F., Pizzurno, E., & Cassia, L. 2015. Product innovation in family versus nonfamily firms: An exploratory analysis. Journal of Small Business Management, 53(1): 1–36.Google Scholar
  21. Diamantopoulos, A., Florack, A., Halkias, G., & Palcu, J. 2017. Explicit versus implicit country stereotypes as predictors of product preferences: Insights from the stereotype content model. Journal of International Business Studies, 48: 1023–1036.Google Scholar
  22. DiRienzo, C., Das, J., Cort, K., & Burbridge, J. 2007. Corruption and the role of information. Journal of International Business Studies, 38(2): 320–332.Google Scholar
  23. Dunning, J. 1981. International production and the multinational enterprise. London: George Allen & Unwin.Google Scholar
  24. Eddleston, K. A., Kellermanns, F. W., & Kidwell, R. E. 2018. Managing family members: How monitoring and collaboration affect extra-role behavior in family firms. Human Resource Management, 57(5): 957–977.Google Scholar
  25. Filatotchev, I., Liu, X., Buck, T., & Wright, M. 2009. The export orientation and export performance of high-technology SMEs in emerging markets: The effects of knowledge-transfer by returnee entrepreneurs. Journal of International Business Studies, 40: 1005–1021.Google Scholar
  26. Fligstein, N., & Dauter, L. 2007. The sociology of markets. Annual Review of Sociology, 33: 105–128.Google Scholar
  27. Gashi, P., Hashi, I., & Pugh, G. 2014. Export behaviour of SMEs in transition countries. Small Business Economics, 42(2): 407–435.Google Scholar
  28. Godey, B., Pederzoli, D., Aiello, G., Donvito, R., Chan, P., Oh, H., Singh, R., Skorobogatykh, II., Tsuchiya, J., & Weitz, B. 2012. Brand and country-of-origin effect on consumers’ decision to purchase luxury products. Journal of Business Research, 65(10): 1461–1470.Google Scholar
  29. Goerzen, A., & Beamish, P. 2003. Geographic scope and multinational enterprise performance. Strategic Management Journal, 24: 1289–1306.Google Scholar
  30. Gomez-Mejia, L., Makri, M., & Kintana, M. 2010. Diversification decisions in family-controlled firms. Journal of Management Studies, 47(2): 223–252.Google Scholar
  31. Graves, C., & Thomas, I. 2006. Internationalization of Australian family businesses: A managerial capabilities perspective. Family Business Review, 19(3): 207–224.Google Scholar
  32. Greene, W. 2004. Fixed effects and bias due to the incidental parameters problem in the Tobit model. Econometric Reviews, 23(2): 125–147.Google Scholar
  33. Gwartney, W., Lawson, R., Park, W., Edward, C., de Rugy, V., & Wagh, S. 2002. Economic freedom of the world annual report. http://www.freetheworld.com/download.html. Accessed December 2017.
  34. Harris, D., Martinez, J., & Ward, J. 1994. Is strategy different for the family-owned business? Family Business Review, 7(2): 159–174.Google Scholar
  35. Helpman, E. 2006. Trade, FDI, and the organization of firms. Journal of Economic Literature, 44(3): 589–630.Google Scholar
  36. Helpman, E., Melitz, M., & Yeaple, S. 2004. Export versus FDI with heterogeneous firms. American Economic Review, 94(1): 300–316.Google Scholar
  37. Hennart, J.-F., Majocchi, A., & Forlani, E. 2017. The myth of the stay-at-home family firm: How family-managed SMEs can overcome their internationalization limitations. Journal of International Business Studies.  https://doi.org/10.1057/s41267-017-0091-y.Google Scholar
  38. Herz, M., & Diamantopoulos, A. 2013. Activation of country stereotypes: Automaticity, consonance, and impact. Journal of the Academy of Marketing Science, 41(4): 400–417.Google Scholar
  39. Herz, M., & Diamantopoulos, A. 2017. I use it but will tell you that I don’t: Consumers’ country-of-origin cue usage denial. Journal of International Marketing, 25(2): 52–71.Google Scholar
  40. Hoetker, G. 2007. The use of logit and probit models in strategic management research: Critical issues. Strategic Management Journal, 28(4): 331–343.Google Scholar
  41. Holmes, K., Feulner, E., & O’Grady, M. 2008. Index of economic freedom: The link between economic opportunity and prosperity. Washington, D.C: The Heritage Foundation & The Wall Street Journal.Google Scholar
  42. Jennings, J. E., Dempsey, D., & James, A. E. 2018. Bifurcated HR practices in family firms: Insights from the normative-adaptive approach to stepfamilies. Human Resource Management Review, 28(1): 68–82.Google Scholar
  43. Johansson, J. 1989. Determinants and effects of the use of “made in” labels. International Marketing Review, 6(1): 47–57.Google Scholar
  44. Johansson, J. K. 1993. Missing a strategic opportunity: managers’ denial of country-of-origin effect. In N. Papadopoulos & L. A. Heslop (Eds.), Product-country images: importance and role in international marketing: 77–86. New York, NY: International Business Press.Google Scholar
  45. Josiassen, A., & Harzing, A. 2008. Comment: Descending from the ivory tower: Reflections on the relevance and future of country-of-origin research. European Management Review, 5(4): 264–270.Google Scholar
  46. Kaifu, Z. 2015. Breaking free of a stereotype: Should a domestic brand pretend to be a foreign one? Marketing Science, 34(4): 539–554.Google Scholar
  47. Kano, L., & Verbeke, A. 2018. Family firm internationalization: Heritage assets and the impact of bifurcation bias. Global Strategy Journal, 8(1): 158–183.Google Scholar
  48. Katz, E. 2001. Bias in conditional and unconditional fixed effects logit estimation. Political Analysis, 9(4): 379–384.Google Scholar
  49. Klein, J. G. 2002. Us versus them, or us versus everyone? Delineating consumer aversion to foreign goods. Journal of International Business Studies, 33(2): 345–363.Google Scholar
  50. Kontinen, T., & Ojala, A. 2010. The internationalization of family businesses: A review of extant research. Journal of Family Business Strategy, 1(2): 97–107.Google Scholar
  51. Korsakienė, R., & Tvaronavičienė, M. 2012. The internationalization of SMEs: An integrative approach. Journal of Business Economics and Management, 13(2): 294–307.Google Scholar
  52. Krugman, P. 1979. Increasing returns, monopolistic competition, and international trade. Journal of International Economics, 9(4): 469–479.Google Scholar
  53. Lamin, A., & Livanis, 2013. Agglomeration, catch-up and the liability of foreignness in emerging economies. Journal of International Business Studies, 44: 579–606.Google Scholar
  54. Lee, J., Lee, B.-K., & Lee, W.-N. 2013. Country of origin’s fit effect on consumer product evaluation in cross-border strategic brand alliance. Journal of Business Research, 66(3): 354–363.Google Scholar
  55. Lee, R., Lockshin, L., & Greenacre, L. 2016. A memory-theory perspective of country-image formation. Journal of International Marketing, 24(2): 62–79.Google Scholar
  56. Liang, X., Wang, L., & Cui, Z. 2014. Chinese private firms and internationalization: Effects of family involvement in management and family ownership. Family Business Review, 27(2): 126–141.Google Scholar
  57. Made-in-Country Index. 2017. Accessed at https://www.statista.com/page/Made-In-Country-Index. Accessed 28 June 2018.
  58. Magnusson, P., & Westjohn, S. A. 2011. Is there a country of origin theory? In S. C. Jain & D. A. Griffin (Eds.), Handbook of Research in International Marketing: 292–316. Northampton, MA: Edward Elgar Publishing.Google Scholar
  59. Maheswaran, D., & Chen, C. Y. 2009. Nation equity: Country-of-origin effects and globalization. In M. Kotabe & K. Kelsen (Eds.), Handbook of international marketing: 91–113. Thousand Oaks, CA: Sage.Google Scholar
  60. Manolova, T., Manev, I., & Gyoshev, B. 2010. In good company: The role of personal and inter-firm networks for new-venture internationalization in a transition economy. Journal of World Business, 45(3): 257–265.Google Scholar
  61. Marano, V., Tashman, P., & Kostova, T. 2017. Liabilities of origin and CSR reporting of emerging market multinational enterprises. Journal of International Business Studies, 48: 386–408.Google Scholar
  62. Maynes, S. 1976. The concept and measurement of product quality. In N. Terleckyj (Ed), Household production and consumption: 529–584. New York: National Bureau of Economic Research and Columbia University Press.Google Scholar
  63. Melitz, M. 2003. The impact of trade on intra-industry reallocations and aggregate industry productivity. Econometrica, 71(6): 1695–1725.Google Scholar
  64. Messersmith, J. G., & Guthrie, J. P. 2010. High-performance work systems in emergent organizations: Implications for firm performance. Human Resource Management, 49(2): 241–264.Google Scholar
  65. Meyer, K., Estrin, S., Bhaumik, S., & Peng, M. 2009. Institutions, resources, and entry strategies in emerging economies. Strategic Management Journal, 30: 61–80.Google Scholar
  66. MOI Survey Methodology. 2010. http://www.ebrd.com/what-we-do/economic-research-and-data/data/moi.html. Last accessed 16 June 2018.
  67. Moore, G. 2011. Escape velocity: Free your company’s future from the pull of the past. New York: Harper Collins.Google Scholar
  68. Moulton, B. 1986. Random group effects and the precision of regression estimates. Journal of Econometrics, 32: 385–397.Google Scholar
  69. Nachum, L., & Song, S. 2011. The MNEs as a portfolio: Interdependencies in MNE growth trajectories. Journal of International Business Studies, 42: 1–25.Google Scholar
  70. Naldi, L., & Davidsson, P. 2014. Entrepreneurial growth: The role of international knowledge acquisition as moderated by firm age. Journal of Business Venturing, 29(5): 687–703.Google Scholar
  71. Narula, R., & Verbeke, A. 2015. Making internalization theory good for practice: The essence of Alan Rugman’s contributions to international business. Journal of World Business, 50(4): 612–622.Google Scholar
  72. Nocke, V., & Yeaple, S. 2007. Cross-border mergers and acquisitions versus greenfield foreign direct investment: The role of firm heterogeneity. Journal of International Economics, 72(2): 336–365.Google Scholar
  73. Papadopoulos, N., & Heslop, L. 2002. Country equity and country branding: Problems and prospects. The Journal of Brand Management, 9(4): 294–314.Google Scholar
  74. Papadopoulos, N., & Heslop, L. 2014. Product-country images: Impact and role in international marketing. New York, NY: Routledge.Google Scholar
  75. Papadopoulos, N., Heslop, L. A., & Bamossy, G. 1990. A comparative image analysis of domestic versus imported products. International Journal of Research in Marketing, 7(4): 283–294.Google Scholar
  76. Papadopoulos, N., & Martín, M. 2011. International market selection and segmentation: Perspectives and challenges. International Marketing Review, 28(2): 132–149.Google Scholar
  77. Pappu, R., Quester, P., & Cooksey, R. 2007. Country image and consumer-based brand equity: Relationships and implications for international marketing. Journal of International Business Studies, 38(5): 726–745.Google Scholar
  78. Patel, P. C., Messersmith, J. G., & Lepak, D. 2013. Walking the tightrope: An assessment of the relationship between high-performance work systems and organizational ambidexterity. Academy of Management Journal, 56(5): 1420–1442.Google Scholar
  79. Pharr, J. 2005. Synthesizing country-of-origin research from the last decade: Is the concept still salient in an era of global brands? Journal of Marketing Theory and Practice, 13(4): 34–45.Google Scholar
  80. Phau, I., & Chao, P. 2008. Country-of-origin: State of the art review for international marketing strategy and practice. International Marketing Review, 25(4): 349–353.Google Scholar
  81. Pukall, T., & Calabrò, A. 2014. The internationalization of family firms: A critical review and integrative model. Family Business Review, 27(2): 103–125.Google Scholar
  82. Rajagopal, P. 2012. Darwinian fitness in the global marketplace: Analysing the competition. Berlin: Springer.Google Scholar
  83. Ray, S., Mondal, A., & Ramachandran, K. 2018. How does family involvement affect a firm’s internationalization? An investigation of Indian family firms. Global Strategy Journal, 8(1): 73–105.Google Scholar
  84. Roth, A., & Banalieva, E. 2016. A temporal bracketing perspective on the internationalisation propensity of SMEs from post-communist transition economies. International Journal of Business and Emerging Markets, 8(3): 228–254.Google Scholar
  85. Rugman, A. 1981. Inside the multinationals: The economics of internal markets. New York, London: Croom Helm, Columbia University Press.Google Scholar
  86. Sharma, P. 2011. Country of origin effects in developed and emerging markets: Exploring the contrasting roles of materialism and value consciousness. Journal of International Business Studies, 42(2): 285–306.Google Scholar
  87. Spence, M., & Essoussi, L. H. 2010. SME brand building and management: An exploratory study. European Journal of Marketing, 44(7/8): 1037–1054.Google Scholar
  88. Stata. 2018. Stata 15 help for j_robustsingular. https://www.stata.com/help.cgi?j_robustsingular. Last accessed 4 July 2018.
  89. Stewart, A., & Hitt, M. A. 2012. Why can’t a family business be more like a nonfamily business?: Modes of professionalization in family firms. Family Business Review, 25(1): 58–86.Google Scholar
  90. Tan, D., & Meyer, K. 2011. Country-of-origin and industry FDI agglomeration of foreign investors in an emerging economy. Journal of International Business Studies, 42(4): 504–520.Google Scholar
  91. Tsai, F.-S., Lin, C.-H., Lin, J. L., Lu, I.-P., & Nugroho, A. 2018. Generational diversity, overconfidence and decision-making in family business: A knowledge heterogeneity perspective. Asia Pacific Management Review, 231: 53–59.Google Scholar
  92. Tsao, C.-W., Chen, S.-J., Lin, C.-S., & Hyde, W. 2009. Founding-family ownership and firm performance. Family Business Review, 22(4): 319–332.Google Scholar
  93. Uhlenbruck, K., Rodriguez, P., Doh, J., & Eden, L. 2006. The impact of corruption on entry strategy: Evidence from telecommunication projects in emerging economies. Organization Science, 17(3): 402–414.Google Scholar
  94. Usunier, J., & Cestre, G. 2008. Comment: Further considerations on the relevance of country-of-origin research. European Management Review, 5(4): 271–274.Google Scholar
  95. Verbeke, A., & Kano, L. 2012. The transaction cost economics theory of the family firm: Family-based human asset specificity and the bifurcation bias. Entrepreneurship Theory and Practice, 36: 1183–1205.Google Scholar
  96. Verbeke, A., Yuan, W., & Kano, L. forthcoming. A values-based analysis of bifurcation bias in family firms. Asia Pacific Journal of Management.Google Scholar
  97. Yan, H., Wickramasekera, R., & Tan, A. 2018. Exploration of Chinese SMEs’ export development: The role of managerial determinants based on an adapted innovation-related internationalization model. Thunderbird International Business Review, 60(4): 633–646.Google Scholar
  98. Zellweger, T., Kellermanns, F., Eddleston, K., & Memili, E. 2012. Building a family firm image: How family firms capitalize on their family ties. Journal of Family Business Strategy, 3(4): 239–250.Google Scholar

Copyright information

© Academy of International Business 2018

Authors and Affiliations

  • Kimberly A Eddleston
    • 1
    Email author
  • Ravi Sarathy
    • 2
  • Elitsa R Banalieva
    • 2
  1. 1.D’Amore-McKim School of BusinessNortheastern UniversityBostonUSA
  2. 2.D’Amore-McKim School of BusinessNortheastern UniversityBostonUSA

Personalised recommendations