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"Enabling Internationalization Excellence for Family Enterprises"

IFE, 2017

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Research on the Internationalization of Family Enterprises – Toward the Holy Grail?

The research on the internationalization of family enterprises took off in 1991 when Miguel Angel Gallo and Jannicke Sveen published the first scientific article on the topic. This study dealt with the facilitating and restraining factors for family enterprises to go international. For nearly 30 years from that publication, various studies have attempted to increase our understanding on the specific factors related to the internationalization of family enterprises. Although this field of research has witnessed explosive growth (e.g. Pukall and Calabro, 2014), there is still lot to do in gaining findings that have large consensus behind them. We are still in a situation wherein opposing findings often fight with each other, for instance:

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From life-experiences to identities and international entrepreneurial behavior

In our recently published research article, Tanja and I discuss our findings of founder-CEOs of early and rapidly internationalized ventures, their identities and relative behavior. In the paper, we elaborate on how individuals, telling about their life-experiences and becoming and being international entrepreneurs, construct their identities into scripts — i.e. a Pioneer, Native, Diplomat, Gambler, and an Eclectic script. Moreover, we illuminate how founder-CEOs’ developmental experiences feed into and frame their international entrepreneurial behavior as emergent in the range of historically bound and generational contexts, encompass the sense-making of international social interaction and shed light to the emotional aspects relative to one’s international entrepreneurial journey.

Are you the explorer of unmarked paths…

A “pioneer script” encapsulates the life narratives of international entrepreneurs who make sense of themselves as forward-looking, possessing a proactive attitude and eagerness to move along unmarked paths throughout their career. “Pioneers” emphasize that while becoming an international entrepreneur is perhaps challenging, it is deeply rewarding in terms of personal growth, as when one persists in believing in something that has not hitherto been attempted. Founders of this script are of great persistency and visionary in their outlook, reflecting the context of doing international business at times and places when there are little or no external support for conducting and enacting the emerging pioneering ideas. To this extent, a Pioneer script involves the sensitivity to the ideologically, politically, and culturally different times an international entrepreneur may encounter, where one might be pressured either to give in, or else to fight for something personally meaningful, while developing an unconstrained yet legitimate status for one’s company and one’s self.

…or a diplomat, who builds bridges between people and yourself?

Some of the founders’ identities and behavior unfolded according to what we could call the ”diplomat script”. This script gains momentum from personal cultural and social encounters that both challenge and provide learning opportunities, constructing knowledge of the international context over time. It also manifests the developing path of internationalization, arrived at through introspection, with interpretation of interactions with people from different backgrounds along one’s life trajectory. Furthermore, a diplomat script seems to be grounded in people-oriented experiences, and fits well with the demands of contemporary internationalization and of entrepreneurial careers that build on social relationships and networks.

Perhaps you were just born with it?

While reflecting the position of founder-CEOs who are internally driven by awareness of the necessity of doing international business, the “native script” also tells of the ones having an entrepreneurial mindset and the privilege of being internationally and/or entrepreneurially oriented from an early period in their life. Assuming that such individuals also have personal motivation for entrepreneurial practices, this script fits well with the behavior of “born global” entrepreneurs, i.e., those who have the internal abilities to adapt easily to various global “cultures” of business (by being, e.g., a “world citizen” or a “digi-native”), and to international careers in which they become more and more embedded. Such characteristics — in conjunction with the push of personal interests and education and the pull of broad social networks, accentuated by the technological advances of the time — enable the person to construct a flexible identity that will endure both personal and social scrutiny.

When “positive delusion” is the name of the game

A “gambler script” manifests the behavior surrounding risk-taking amid the uncertainties of founding an international new venture. If such a script is followed through, taking on calculated risks provides the “thrill of the game” while pursuing big dreams. Reaching millions of online followers worldwide may be both the motivation and the means for their international venturing. As one might expect from such individuals, a pre-eminent characteristic is intelligence, applied to dealing dispassionately with human cognition and emotions. Thus, this script seems to incorporate a sense of responsibility for one’s risk-taking actions. Disregarding the negative connotations of “gambling”, international entrepreneurship makes sense as a kind of “sport” of logic and problem-solving, one that makes it necessary to keep a close eye on competitors’ actions and reactions, have good abilities to handle emotions and manage one’s own reactions in stressful situations.

The reflexive Eclectic

When we suggest such categorizations of founders’ identity constructions and their “narrative scripts”, we ought to remember that no entrepreneur should beput into a box. Neither can we maintain much of stability in the rapidly changing and dynamic world we live in. Hence, we ought to read further the international entrepreneurship script as an eclectic one. Many of the founders’ experiences manifest eagerness to and ability to learn, and strong willingness to be transformative in the dynamic and changing international business context. In addition to an internal motivation to initiate and to work diligently for the next “big thing”, founders may find a good degree of reflexivity over one’s actions, with a profound willingness to reflect on and re-interpret their interaction with their (social) environment on the way. Manifesting a rather deep sense of one’s own self — while also ability to challenge one’s assumptions following feedback from others — an “eclectic script” seems to give an entrepreneur the possibilities to adopt a myriad of approaches within the complexity of international and entrepeneurial practices.

We encourage you to read further our open access article, where you’ll find the importance of considering the various cultural and time contexts, generational contexts, and social contexts, as well as the emotional aspects in which one becomes and is an entrepreneur leading an international venture. Considering these dimensions underpinning individuals’ actions and behavior would then have the aim to develop more reflective practices – especially reflexivity – among those who engage daily in “writing the new scripts” of international entrepreneurship, such as educational insitutes, media as much as entrepreneurs themselves.

Book in the picture: Polkinghorne, D., E. (1988) Narrative Knowing and the Human Sciences. New York: State University.

CALL FOR CHAPTERS ON FAMILY FIRM (FF) INTERNATIONALIZATION


This is a call for chapters on family firm (FF) internationalization for Scholarly Handbook published by Palgrave Macmillan. The book is focused on the role of FF-specific views and networks in their internationalization, the actual internationalization process and FFs internationalizing from or to Emerging Markets in special. Both empirical and conceptual work is welcome.

Title of the Book: Scholarly Handbook of Family Firm Internationalization

Editors: Tanja Leppäaho (LUT University) and Sarah Jack (Lancaster University School of Management)

Publisher: Palgrave Macmillan

Expected publication time: Spring 2021

Family Firms (FFs) form the majority (about 80%) of all firms around the world and they account for an enormous percentage of the employment, the revenues, and the GDP of most capitalist countries (EFB, 2012). As of now, their value as a an engine of stability and long-term growth and prosperity, simultaneously acting as natural incubators of an entrepreneurial culture, fostering the next generation of European entrepreneurs, has been finally recognized and tools to help them have been hoped for (European Commission, 2015).

Although it was long thought that large multinational corporations had an overwhelming position in international business (Oviatt & McDougall, 1994), it has recently been recognised that substantial numbers of entrepreneurial and family firms are active in the international arena (Casillas & Acedo, 2005). FF internationalization has become an important research area both practically and politically, and now also theoretically (see e.g. Arregle et al., 2017). The unification of ownership and management enables the CEO e.g. to make opportunistic investments and/or rely on intuition (Gedajlovic et al., 2004). Hence, FFs have the potential to adapt to changing environments, launch products, and enter markets that investor-controlled or managerially led firms are unable to address (Dyer & Whetten, 2006). In adverse economic conditions, family firms have been found to sustain more profitable businesses than firms with other ownership structures (Sirmon & Hitt, 2003).

It has been recognized that FF internationalization differs from those by firms owned via other types of ownership structures, but we are still missing nuanced, in-depth understanding of the FF-specific features related to their long-term existence, family-intertwinement in ownership and management, especially high level of trust inside the firm, etc. (Arregle et al., 2017; Kontinen & Ojala, 2010; Pukall & Calabro, 2014; Reuber, 2016). The number of studies on FF internationalization is, fortunately, constantly growing: the review by Kontinen and Ojala in 2010 was based on 25 articles, whereas the most recent one (Leppäaho et al., 2016) was based on 158 articles. However, very recently Arregle et al. (2017, p. 1) summarized that the need for in-depth nuances still exists: ”the extant conceptual and empirical research on internationalization indicates that family involvement matters for internationalization, yet the precise consequences of this involvement remain unclear”. In the current scholarly handbook, the focus will be on the features making FF internationalization different: their long-term existence; their special type of network ties; the theoretical views explaining the specific features of FFs combined with internationalization views.

The distinctive features of Family Firms (FFs) are related to their human, family-oriented and longitudinal nature. FFs are typically passed from generation to generation, with constant triggers for change. The triggers can involve changes in the family (births, deaths, illnesses, conflicts), in the business (changes in markets, technology, competitive situation, institutions), and in ownership (involving e.g. changes of ownership from founders to siblings or to cousins, disengagements, the selling of shares outside the family, the sale of business lines, etc.) (Gersick et al.,, 1997). The theoretical perspectives explaining distinctiveness of FFs  include agency theory (Karra et al., 2006), the concept of stewardship (Le Breton-Miller & Miller, 2009), a resource-based view (Chrisman et al., 2005), and the socioemotional wealth (SEW) perspective (Gomez-Mejia et al., 2011), among others.

SEW has indeed been recognized as a central reflection point and driver for the strategic decision-making and behavior of FBs (e.g., Berrone et al.,, 2012), serving as the “defining feature of a family business […] central, enduring, and unique to the dominant family owner, influencing everything the firm does” (Gomez-Mejia et al., 2011, p. 692). However, we know very little of the role of these conceptual and theoretical perspectives in their internationalization process (Leppäaho et al., 2016).

The most applied definitions regard internationalization as “the process of increasing involvement in international operations” (Welch & Luostarinen, 1988, p. 36) or “the process by which firms both increase their awareness of the direct and indirect influence of international transactions on their future, and establish and conduct transactions with other countries” (Beamish, 1990, p. 77). However, within the discipline of FF internationalization, there has been a tendency to produce static findings by studying internationalization through one-shot, cross-sectional studies, using correlational analytical methodologies (McAuley, 2010; Welch & Paavilainen-Mäntymäki, 2014) with minimal context-embeddedness (Leppäaho, et al., 2016) – despite the fact that internationalization is a process, and that approaches incorporating time, dynamism, and longitudinal observations are needed if a solid process theory is to be built.

FFs as firms offer a fruitful context to study internationalization through a process perspective: FFs possess certain processual features that are typical of them (though not necessarily unique to them). Thus, they may be passed on from generation to generation and even over centuries, with numerous processes between the business, family members, and ownership constantly taking place and influencing each other (Gersick et al., 1997). The strategy management process of FBs differs from that of non-FBs, shaped as it is by family goals, interests and culture, the involvement of both family and nonfamily members in management and governance, sibling relationships, and succession (Sharma et al., 1997).  Succession processes are critical for knowledge and skill transfer between different generations (Davis & Harveston 1998), and new generations may possess higher propensities and capabilities to promote internationalization (e.g. Calabro et al., 2016). The different generations and family members involved in the FB may also attach differing importance to SEW and its different dimensions, which include family continuity, family prominence, and family enrichment (Debicki et al., 2016). Thus, founding family owners may be more inclined to preserve SEW and hence resist internationalization than later generations (Fang et al., 2018).

Family ownership influences both inside-the-firm and outside-the firm network ties (Arregle et al., 2007; Salvato & Melin, 2008). FFs typically possess network ties with a high level of trust, closeness and long-term commitment (Arregle et al., 2007; Roessl, 2005; Zellweger et al., 2018), but how this influences on their international network ties has been very little touched upon (Kampouri et al., 2017; Kontinen & Ojala, 2010; Kontinen & Ojala, 2012; Pukall & Calabro, 2014). Like stated above, this scholarly handbook tackles important viewpoints of FF internationalization process, as per suggestion of e.g. Kontinen and Ojala (2010), Pukall and Calabro (2014), Reuber (2016) Arregle at al. (2017), Kampouri et al. (2017) and Leppäaho et al. (2016).

The scholarly handbook will have four specific core areas, with 5-6 chapters each:

       i.          FF-specific views and internationalization

      ii.          Internationalization process

    iii.          Networks in FF internationalization

    iv.          FF internationalization in and from Asia and Emerging Markets

The preliminary timetable (subject to changes) is as follows:

  1. August 15, 2019: Submission of a 1-2-page proposal of the book chapter
  2. September 15: Decision on accepted chapters (informed directly to authors)
  3. November 30, 2019: Submission of the first draft of the book chapter
  4. February 2020: Letter on the needed revisions (to the authors)

3.     May 2020: Submission of a revised version of the book chapter

4.     January 2021: Planned publication of the handbook

Both empirical and conceptual work is welcome. Please address your questions and send your chapter proposal, with an indication under which sub-theme of the book it is written for, in a PDF form to tanja.leppaaho@lut.fi by August 15, 2019. See also http://ife.fi

References

Arregle, J. L., Duran, P., Hitt, M. A., & Van Essen, M. (2017). Why is family firms’ internationalization unique? A meta‐analysis. Entrepreneurship Theory and Practice, 41(5), 801-831.

Arregle, J. L., Hitt, M. A., Sirmon, D. G., & Very, P. (2007). The development of organizational social capital: Attributes of family firms. Journal of management studies44(1), 73-95

Beamish, P. W. (1990). The internationalisation process for smaller Ontario firms: a research agenda. Research in global business management, 1, 77-92

Berrone, P., Cruz, C., & Gomez-Mejia, L. R. (2012). Socioemotional wealth in family firms: Theoretical dimensions, assessment approaches, and agenda for future research. Family Business Review, 25(3), 258-279.

Cabrera‐Suárez, K., De Saá‐Pérez, P., & García‐Almeida, D. (2001). The succession process from a resource‐and knowledge‐based view of the family firm. Family Business Review, 14(1), 37-48.

Calabrò, A., Brogi, M., & Torchia, M. (2016). What Does Really Matter in the Internationalization of Small and Medium‐Sized Family Businesses?. Journal of Small Business Management, 54(2), 679-696.

Casillas, J. C., & Acedo, F. J. (2005). Internationalisation of Spanish family SMEs: An analysis of family involvement. International Journal of Globalisation and Small Business, 1(2), 134–151.

Chrisman, J. J., Chua, J. H., & Sharma, P. (2005). Trends and directions in the development of a strategic management theory of the family firm. Entrepreneurship Theory and Practice, 29(5), 555-576.

Davis, P. S., & Harveston, P. D. (1998). The influence of family on the family business succession process: A multi-generational perspective. Entrepreneurship Theory and Practice, 22(3), 31-53Dyer, W.G. & Whetten, D.A. (2006). Family firms and social responsibility: preliminary evidence from the S&P 500. Entrepreneurship Theory and Practice 30, 785-802.

Debicki, B. J., Kellermanns, F. W., Chrisman, J. J., Pearson, A. W., & Spencer, B. A. (2016). Development of a socioemotional wealth importance (SEWi) scale for family firm research. Journal of Family Business Strategy, 7(1), 47-57.

EFB, European Family Businesses (2012). Family Business Statistics. [online document]. Available at: http://www.europeanfamilybusinesses.eu/uploads/Modules/Publications/fa mily-business-statistics.pdf

European Commission (2015). Information on family businesses in Europe. Available at: http://ec.europa.eu/growth/smes/promoting-entrepreneurship/we-work-for/family-business/index_en.htm

Fang, H., Kotlar, J., Memili, E., Chrisman, J. J., & De Massis, A. (2018). The pursuit of international opportunities in family firms: Generational differences and the role of knowledge‐based resources. Global Strategy Journal, 8(1), 136-157.

Gedajlovic, E., Lubatkin, M.H. & Schulze, W.S. (2004). Crossing the threshold from founder management to professional management: a governance perspective. Journal of Management Studies, 41, 899-912.

Gersick, K. E., Davis, J. A., Hampton, M. M., & Lansberg, I. (1997). Generation to generation: Life cycles of the family business. Harvard Business Press.

Gomez-Mejia, L. R., Cruz, C., Berrone, P., & De Castro, J. (2011). The bind that ties: Socioemotional wealth preservation in family firms. Academy of Management Annals, 5(1), 653-707.

Kampouri, K., Plakoyiannaki, M. E., & Leppäaho, T. (2015). Family Business Internationalisation and Networks: Emerging Pathways. Journal of Business and Industrial Marketing, in press.

Karra, N., Tracey, P., & Phillips, N. (2006). Altruism and agency in the family firm: Exploring the role of family, kinship, and ethnicity. Entrepreneurship Theory and Practice, 30(6), 861-877.

Kontinen, T. & Ojala, A (2012). Social capital in the international operations of family SMEs. Journal of Small Business and Enterprise Development, 19 (1).

Kontinen, T., & Ojala, A. (2010). The internationalisation of family businesses: A review of extant research. Journal of Family Business Strategy, 1, 97-107.

Le Breton‐Miller, L. & Miller, D. (2009). Agency vs. stewardship in public family firms: A social embeddedness reconciliation. Entrepreneurship Theory and Practice, 33(6), 1169-1191.

Leppäaho, T., Metsola, J & Paavilainen-Mäntymäki, E. (2016). Process view and the internationalization of family businesses. Academy of Management conference, Anaheim, California, USA, 5.-9.8.2016.

McAuley, A. (2010). Looking back, going forward: reflecting on research into the SME internationalisation process. Journal of Research in Marketing and Entrepreneurship, 12(1), 21-41.

Oviatt, B.M. & McDougall, P.P. (1994). Toward a theory of international new ventures. Journal of International Business Studies, 25(1), 45-64.

Pukall, T. J., & Calabrò, A. (2014). The Internationalisation of Family Firms A Critical Review and Integrative Model. Family Business Review27(2), 103-125.

Reuber, A. R. (2016). An assemblage‐theoretic perspective on the internationalization processes of family firms. Entrepreneurship Theory and Practice, 40(6), 1269-1286.

Roessl, D. (2005). Family businesses and interfirm cooperation. Family Business Review18(3), 203-214.

Salvato, C. & Melin, L. (2008). Creating Value Across Generations in Family-Controlled Businesses: The Role of Family Social Capital. Family Business Review 21 (3), 259-276.

Sharma, P., Chrisman, J. J., & Chua, J. H. (1997). Strategic management of the family business: Past research and future challenges. Family business review, 10(1), 1-35.

Sirmon, D. G., & Hitt, M. A. (2003). Managing resources: Linking unique resources, management, and wealth creation in family firms. Entrepreneurship theory and practice, 27(4), 339-358.

Welch, L. S., & Luostarinen, R. (1988). Internationalization: evolution of a concept. Journal of General Management, 14, 34-55.

Welch, C., & Paavilainen‐Mäntymäki, E. (2014). Putting process (back) in: Research on the internationalization process of the firm. International Journal of Management Reviews, 16(1), 2-23.

Zellweger, T. M., Chrisman, J., Chua, J., & Steier, L. (2018). Social structures, social relationships, and family firms. Entrepreneurship theory and practice: ET&P, 33(6).



Values as assets

Service designer Petri Aaltonen notes that the core of service business is not how valuable the customer is to the company, but what is the value the company brings to the customer. Hence, focus in service design should first and foremost be on the value experience, combining different levels of feeling and meaning. This lead me thinking more of the meaning of word value(s) in business.

Lately, I have been following one of my friends in LinkedIn, noting how he has become a professional in encouraging others. One update and post after another, be it work or free-time related, he is giving positive feedback and appreciation to his co-workers, colleagues, customers and friends. I could say, my friend’s activity and communication is led by the value of encouragement. The leading thought does not seem to be how much his actions bring value to the company he represents, but how much his actions are bringing meaning and value to his network and people he personally encounters – online or offline. He has internalized a value and attitude – or a personal brand – which reaches people on levels of both feeling and reason.

If service and service leadership is about value experience, I would say it is exactly the personal level appreciation and valuing that should be in a bigger role when building up the firm-level value for customers. It would not be primarily about competing for the value the customers brings to the company (cashflow), but the meaningfulness and feeling of working with that particular company that brings value (experience) to the customer. Like Aaltonen notes, service designing in companies must be based on knowing and seeing the customer and their needs; one must go close to the human: “Leaders’ attitude should be that I am here to learn, not leading.”

Because service business is growing its percentage in overall business activities, it is meaningful to take notion of how value experience and services are lead in family businesses. Not least, because values serve as the anchor for family firms, grounding much of its organizational culture, leadership, activities and objectives. Therefore, family firms as the kind of value leaders have the great position to be encouraging and showing their customers and other stakeholders how they reflect on values as assets in their operations e.g. in designing and producing services.

Satu

By chance or by chased chance?

I read a book about Finnish entrepreneurship stories (Yrittäjän Taivas+Helvetti Vol. 3, The Heaven and Hell of an Entrepreneur Vol. 3 in English), which includes a story about Risto Käkelä and his family firm Avant Tecno, a manufacturer of loaders, located in Ylöjärvi, Finland. Risto tells how in 1992 Jorgen, a Danish man having a small firm in their barn with his wife importing agricultural machinery to Denmark, happened to walk at the exhibition stand just when Avant Tecno started the machine of their loader on the last day of the first foreign trade fair of the firm in Germany. Jorgen tried the loader and eventually his firm started to import the machines of Avant Tecno to Denmark. Since the start of the relationship, Avant Tecno has sold machines to Denmark with 70 million euros, and in 2017 Risto gave Jorgen a gift for “the first 25 years” at the open house at Jorgen’s firm in Denmark.

“It was a lucky event for both of us. If we had started the machine ten seconds later, Jorgen would have walked by so far away that he wouldn’t have turned back”.

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WHY DID THE PRESIDENT OF FRANCE EMMANUEL MACRON SPEAK SOME WORDS OF FINNISH?

The president of France Emmanuel Macron is currently visiting Finland. Yesterday, he started his speech with a few phrases of Finnish. In Denmark, he started with a few words of Danish. His pronunciation of Finnish was not perfect, but actually, pronunciation was not the point at all. The Finnish faces around him, and of the ones seeing this on TV, were all smiles.

According to my research findings, in addition to spending free time together one of the most important ways of getting closer to the customer or partner is to know some historical facts and a few words of the language of the target country.

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“In communication, 10 % is words”

For my research, I interview founders of internationalizing small firms. As a norm, they struggle with the scarcity of time, money or other resources, but at the same time, they all seem to dream big and possess a rather solid belief in who they are and what they are doing. You may or may not relate, but at least it seems to be the case for the majority of small business owners, entrepreneurs, and managers in charge of operationalizing strategy that I meet and interview. And, what becomes vital for many of the start-up founders, investors too seem to somehow become spokesmen of those “dream big” ventures, sharing something of that initial belief.

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The Value of Networks of Networks for Internationalization

Asking from existing trustworthy network ties about new potential networks seems to have been an efficient way to expand internationally through history. However, according to our research project, current family entrepreneurs could use this approach more efficiently. Firstly, it does not cost anything. Secondly, time is saved, since the element of trust is more present there – being that the introduction to the new contact is done via someone who already trusts both parties.

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Internship for PhD Students: Why Not?

Last September 2017 I started my journey towards PhD degree, and as a crucial part of it, the data collection of our research project started in the beginning of 2018. Having visited and interviewed a bunch of interesting family SMEs in Finland, I feel confident that we are digging a fruitful and important turf of internationalization phenomena, and that there is a lot to learn from these stories of successful family enterprises. For now, I won’t go that deeper into the insights relevant to our research project (because there are still many interviews to be made during the spring and, thus, more insights to be taken into consideration), but rather I would like to reflect these enterprise visits to the researcher’s work and career development in general. Being at the early stage of my PhD degree path and having done few courses related to the research field and methodology, I think that, just like the case often is with lower level degrees, there should be compulsory internship or practical training period for each PhD to really get to know, what the real world is really like regarding one’s own research field.

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Social interaction is an essential part of the international trust game

Sorry, this post is available only in Finnish! It has been tailored for Finnish entrepreneurs in special.

Olen tutkijanurani (2008-2018) aikana perehtynyt syvästi 23 suomalaisen pienen ja keskisuuren perheyrityksen kansainvälistymiseen. Tässä kirjoituksessa esittelen tutkimukseni kautta tekemiäni yleisiä havaintoja erityisesti näiden 23 pk-perheyrityksen kansainväliseen verkostoitumiseen ja kulttuuriosaamiseen liittyen. Lopussa vielä valotan miten 1870-1930-lukujen perheyrittäjät (Serlachius, Schauman, Waldén, Ahlström) verkostoituivat ja hallitsivat vieraat kulttuurit.

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