Family firms in the global economy: toward a deeper understanding of internationalisation determinants, processes and outcomes

Research on the internationalization of family firms has flourished in recent years, yet the mechanisms through which family involvement shapes the determinants, processes, and outcomes of internationalization remain little understood and largely undertheorized. We contribute to research at the intersection of international business and family business by examining the roles of different sources of family firm heterogeneity and the context in shaping the determinants, processes, and outcomes of business internationalization. Drawing on this analysis, we summarize the articles published in this special issue and set out an agenda for further research aimed at advancing a more fine-grained and contextualized understanding of internationalization in family firms

Family involvement, employee engagement and employee performance in enterprising family firms

The study has been designed to analyze probable determinants of employee performance in family firms. A quantitative methodology was adopted. Data were collected from 113 employees from fifteen family businesses located in the Western Province in Sri Lanka. Correlation and ordinal logistic regression analysis were used to elaborate the relationships. Correlation analysis indicated that both family involvement and employee engagement correlate to employee performance. Family involvement in case of holding positions in functional and strategic levels by family members has shown no correlation to employee performance. Yet, having a family member as immediate boss/supervisor of an employee in the job has a strong correlation to employee performance. Regression analysis makes evident that almost all coefficients of the employee are negatively related to employee performance. Yet, all levels of employee engagement are significantly related to employee performance. It further shows that being the lower levels of employee engagement increases the likelihood of lower levels of employee performance. © 2017 Mendel University of Agriculture and Forestry Brno. All rights reserved

Private Equity Minority Investments in Large Family Firms: What Influences the Attitude of Family Firm Owners?

This paper extends research in the field of private equity investments in family firms. It contributes to the literature by fundamentally analyzing the decision criteria of family firm owners for using minority investments of private equity investors. This type of financing might be of great interest to family firms, as the family firm owner is able to secure majority ownership and control over the family business. Likewise, minority investments might be attractive for private equity investors, as they are mostly not leveraged and therefore independent from capital market turbulences. Using data from 21 case studies, we identify challenges induced by the family or the business that lead to the phenomenon of private equity minority investments in family firms. We find that perceived benefits and drawbacks of private equity investments are influenced by business and family characteristics. Based on pecking-order theory, resource-based view and the strategy paradigm, propositions as well as a conceptual framework are developed

Deciphering Ownership of Family Business Groups

Family business groups are highly complex ownership structures. In this chapter, we suggest that owning a family business group needs to create benefits that overcome the transaction costs and ownership costs emerging from the complexities of ownership. We separate the effects of ownership into two main categories: the legal effects and the emotional effects. In terms of legal ownership, the control over the business and its resources suggests a freedom to operate the businesses and claims on their resources, to append new businesses to the FBG, to organize their relationships between the separate businesses and to exit from the businesses at will. The emotional benefits include the service of the owners’ self-deserving interests, positive effects on the family cohesion and togetherness and growth in social recognition and status. It seems that ownership along with its multiple effects may play a more vital role in explaining the development of family business groups than has been previously thought.Post-print / Final draf

International and Product Diversification:Which Strategy Suits Family Managers

This paper explores the impact of family and professional managers on performance and how this relationship is affected by international and product diversification. Using a dataset of 262 German firms from 2000 to 2009, we find that an increasing proportion of family managers on the management board is associated with higher performance. This relationship is negatively moderated by higher levels of international diversification but reinforced by increased product diversification due to differences in the human and social capital between family and professional managers. Firms with a significant presence of family members on the top management team (TMT) face a choice of either adopting a corporate strategy that runs counter to “global-focusing” or adjusting the balance of family and professional managers in the TMT. Managerial summary Deciding the extent of family involvement on the executive team is a key strategic decision. While our research supports the general proposition that family managers will enhance performance we show they don't have the same positive impact in all situations. More precisely, we show that family managers are more suited to lead diversification than internationalization. If a family firm wants to go international it therefore is sensible to increase the proportion of professional managers on the executive team. Diversifying into new product markets, however, does not require outside expertise commonly associated with professional managers

The Emergence of a Family Business Group: The Role of Portfolio Entrepreneurship

There are explicit calls for deeper understanding of the creation and development of family business groups. Responding to this gap in the body of knowledge, this chapter presents a case study highlighting the role of portfolio entrepreneurship in the development of a family business group. This chapter opted for an exploratory case study approach and interviews were conducted with the founder—that is, with the portfolio entrepreneur—and the second-generation members. This research highlights three important points in family business group development: first, the group grows out from entrepreneurial actions; second, entrepreneurial objectives turn to family objectives; and third, the groups are able to remain rather loose due to close social bonds between the owners.Post-print / Final draf

Entrepreneurial Behavior as Learning Processes in a Transgenerational Entrepreneurial Family

Within the extant body of literature, little is known as to how transgenerational entrepreneurial families develop entrepreneurial mind-sets in order to create value across generations. Accordingly, this chapter aims to explore the role of the family ownership group in entrepreneurial behavior by examining the entrepreneurial learning process in a transgenerational entrepreneurial family. In achieving this aim, the 4I organizational learning framework by Crossan et al. (An organizational learning framework: From intuition to institution. Academy of Management Review 24 (3): 522-537, 1999) is adapted as a theoretical lens. The empirical evidence that draws upon evidence from a detailed longitudinal case study illustrates the interjectory influence of the family ownership group within this process, suggesting that entrepreneurial learning in a transgenerational family firm is embedded at the family group level and reproduced and co-created as a result of resilient entrepreneurial behavior

The socio-psychological challenges of succession in family firms: The implications of collective psychological ownership

One of the most distinct challenges that family businesses face is succession. Several researchers have recognized that it is not a single event, but a process associated with social and psychological challenges. This article advances knowledge on these challenges drawing on the theory of collective psychological ownership (CPO). More precisely, we present the socio-psychological challenges in succession, and the main factors related to them and discuss how CPO affects this relationship. This work serves as an analytical framework for future research on the topic.Post-print / Final draf