The perils of information - Evidences from a family MNC

Internationalization of family firms can be regarded as an entrepreneurial strategy with the aim of company growth (Kraus et al., 2012), encouraged by their longterm orientation (Claver et al., 2009). However, researchers have founded and provided contrasting evidences about the relation between family involvement and internationalization (De Massis et al., 2012). While some scholars highlight the conservative, risk averse, and inflexible attitude of family firms (i.e., a contradiction), other scholars see them as a setting where entrepreneurship is enabled to born (Mitter et al., 2014).

Historically, Gallo and Sveen (1991) wrote the first seminal work: they found as family businesses are more rigid and slower to internationalize then non-family ones. Five years after, Gallo and Garcia Pont (1996) identified some factors that influence the internationalization process in family firms, classifying them according to two dimensions: rigidity variables and elasticity ones. These variables are summarized as strategic factors (firm’s features and its environment), family issues (internal organization), and top management’s attitudes.

Graves and Thomas (2006, and 2008) suggest that the main characteristics that affect a family firm’s ability to internationalize are the attitude toward risk-taking, vision and managerial style of successors, expertise of working family members, the degree of family harmony, and family equity (own financial) issues. Moreover, Tsang (2002) suggests as family businesses have different and distinctive approach in dealing with foreign direct investments (FDIs) because are characterized by less developed information and control systems.

The SEW aspects introduced in the previous paragraph – in particular, the fear of losing control – are the main barriers to going international: becoming international implies changes, as strategies and the entire organizational structure have to be redesigned.

Many family members are suspicious of this redesign because they fear changes in ownership and management that negatively influence their decision-making power (Gallo & Sveen, 1991; Bhaumik et al., 2010, Mitter et al., 2014). Table 4 summarizes main seminal academic’s contributions until 2005.

In general, concerning the overall process of venturing into foreign markets, most studies support the already mentioned Uppsala stage model for family firms (Calabrò, 2014; Mitter et al., 2014), starting exporting activities within country at low distance, both in cultral and geographical terms (e.g., Graves & Thomas 2004, 2008; Claver et al. 2007; Puig & Fernandez Perez, 2009).. Hence, accumulating knowledge and resources, they expanded in more remote markets.

In specific, FBs tend to choose foreign market entry modes that do not threaten their independence, avoiding strategic alliances and joint ventures, which not only require resources but also the relinquishment of control.

This aloofness avoided around when the involved partner is another FB, because of shared values concerning trust, loyalty, and continuity (Fuentes-Lombardo and Fernandez-Ortiz, 2010; Swinth and Vinton, 1993). Last, research shows that families’ new generations seems to be almost entirely positive on internationalization.

As new generations seek to enter the business, they either create own “space” for themselves through foreign subsidiaries, or – generally – try to foster the business through international expansion (Fernández & Nieto, 2005; Menéndez Requejo, 2005; Okoroafo & Perryy, 2010). However, other studies indicate no impact of higher generational involvement on internationalization, an effect that can be explained through the increasing size of the businesses (Westhead & Howorth, 2006; Okoroafo & Koh, 2010, Pukall & Calabrò 2014).