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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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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).



Project

According to top professors “There is nothing more practical than a good theory”. The aim of this research project is to be both practically and theoretically relevant in the area of internationalization of family enterprises. We have good chances for that: Pukall and Calabro (2014) have noted that Tanja Leppäaho is currently the scholar with largest number of publications on the internationalisation of family enterprises and she has a great research team around her.

Practically, we aim to provide family enterprises, which make more than 80% of the Finnish firm population and are the focus of current Strategic Development Programme of the Finnish Government, with managerial recommendations and understanding of their strengths and weaknesses for internationalization. Theoretically, we build a strong theory on the internationalization process over time and publish high-quality research by strong theorizing from the empirical findings.

In addition to internationalization pathways over time, we concentrate especially on network ties within the internationalization of family enterprises. The project will be implemented by collecting three longitudinal, empirical databases.

Work Package 1 is an archival study and will take a historical approach on the internationalization of long-enduring family enterprises via archives. Work Package 2 is based on a longitudinal multiple case study approach and well-being measurements of family managers in about 20 Finnish family enterprises. In Work package 3 we will collect and analyze longitudinal survey and panel data on Finnish export SMEs.

People

Tanja Tanja

Tanja is the manager of the research project running in between 1.9.2017 and  31.8.2022. The project is hosted by Lappeenranta University of Technology and funded by the Academy of Finland. Tanja’s previous employment was Professor of Entrepreneurship and International Business (tenure track) at Jyväskylä University School of Business and Economics. Tanja’s areas of interest are international entrepreneurship, networking, process, family entrepreneurship, and qualitative methodology. According to Pukall and Calabro (2014), Tanja is  currently is the leading expert of the area on a global scale.

Tanja entered academia in 2008 and graduated as PhD (economics) from the University of Jyväskylä in 2011. On completing her PhD she was recruited as an Senior Lecturer at the University of Edinburgh Business Schoolwhere she gained important experience and extensive research networks within the UK. Tanja’s current endeavour is to make internationalization of family enterprises an even stronger area for specialization and a centre of excellence in Finland and Lappeenranta.

Tanja has published in various journals including Entrepreneurship Theory and Practice, Family Business Review, Journal of Small Business Management, International Marketing Review, and International Business Review. She has received several awards.  Babson College Entrepreneurship Research Conference (BCERC) awarded Tanja and her coauthor Professor Sarah Jack from University of Lancaster School of Management the Bertarelli Family Best Paper Award for their 2016 joint study on international networking among family enterprises. Tanja’s article on qualitative case studies in Family Business Review was the most cited article in 2016.

Tanja very much likes teaching and company collaboration. Example of the student-company collaboration she has facilitated can be found via link below. Her CV can be found via the second link below. Tanja’s newest publication related to institutional distance and international networking can be found here.

International Students Innovating the International Strategy of Valtra and Valmet – Jyväskylän yliopisto

Tanja’s Curriculum Vitae and Publications

Jaakko Jaakko

Jaakko is working as a Research Associate in the project. He is involved in carrying out the longitudinal multiple-case study (work package 2) and survey (work package 3) parts of the project in particular. He is the person contacting the case firms, running and analyzing the interviews, and organizing networking events around the project.

Jaakko holds Master’s Degree in International Business and Entrepreneurship from the University of Jyväskylä and Bachelor’s Degree in International Business from the Lappeenranta University of Technology (LUT). Jaakko works as a Junior Researcher at LUT and alongside the project works on his own dissertation about the internationalization processes of small and medium-sized family enterprises (family SMEs). Before this occupation he worked in sales and customer management roles at two rapidly internationalizing startup and growth companies, Dream Broker Oy and Vainu.io Software Oy. During the Master’s studies, when Jaakko worked as research assistant for the leader of this project Tanja Leppäaho, he got excited with the research on family business internationalization, did the best family business Master’s thesis in Finland awarded by the Finnish Family Business Association, and participated in writing a scientific article on the process nature of the research on family business internationalization.

Jaakko’s areas of interest are growth and internationalization in family and other SMEs, entrepreneurship education, and case study research. Jaakko aims to become an expert in the fields of international business and entrepreneurship with not only contributing in academia but also disseminate expertise to student and company levels. Work experience in private sector helps reflecting research outcomes to more practical level and building networks.

Satu Satu

Satu is working as a Research Associate in the project. She is involved in the archival study (work package 1) of the project in particular, finding out about the internationalization of Ahlström, Serlachius, Scauman, and Vaisala, focusing on the narrative nature of the data and analysis.

Satu holds a Master’s Degree in International Business and Entrepreneurship from University of Jyväskylä and since May 2016, Satu has been working on her PhD research in the Faculty of Strategy and Entrepreneurship. Satu’s dissertation “Constructing an international entrepreneurship identity through narratives” studies the emergence and evolvement of the international entrepreneurship process from the individual, behavioral and career perspective. Satu’s research efforts hold the promise of producing new theoretical and practical insight on how the complex and contextual international entrepreneurship process unfolds in reality and as a career path.

The current project is a fluent continuum to Satu’s past and current interests. Since 2012, Satu has gained experience with a first-row-seat in different kinds of projects aiming to develop and enhance entrepreneurship and internationalization of SMEs both through employment and through “pro bono” advisory roles. Prior to her Master’s degree, Satu worked in customer relationship management and member communications for the American Chamber of Commerce in Helsinki, aiding Finnish start-ups to grow their networks beyond national borders. Currently, in addition to her full-time doctoral research project, Satu is serving as a board member of a small internationally oriented family firm called Serdeco Oy and supervising for Master’s thesis projects on the internationalization of SMEs at the University of Jyväskylä.

Satu’s overall aspirations are to intensify the voices of the practitioners, harness the advantages of the narrative approach in international entrepreneurship research, and enable further and sound theorizing of internationalization.

Oleksiy Oleksiy

Oleksiy Kovalenko (MSc. in Psychology, in Spring 2018 also Master in Economics) is responsible for the visual looks and contents of the project.

Take Away

  1. All relationships are first and foremost social. Almost everywhere else the role of social interaction is significantly bigger than in Finland.
  2. Learn the language and culture of the target country. When your partner recognizes the effort you put into this, he or she becomes more committed and willing partner.
  3. Hire local employees. Nothing replaces local business knowledge and networks.
  4. Choose a foreign partner, whose values suit for the values of the family firm.
  5. Unless you are familiar with the foreign market and its practices or you have plenty of resources, it is recommended to start with export as an entry mode, so that the market knowledge and network relationships evolve.
  6. Create networks actively and creatively for internationalization. Suitable network relationships can be found through partners, subcontractors, trade fairs or competitors.
  7. Agility is a strength in family firms. Utilize that also in internationalization. With the help of fast and flexible decision-making you are one step ahead of the more bureaucratic competitors.
  8. Create network relationships also with the ones outside the primary relationship. They enable agile actions when facing changes or pursuing growth.
  9. During succession you should pay attention to the distribution of ownership. According to research findings, too fragmented portfolio-based ownership structure, in which some of the siblings don’t want to risk the resources of the firm not even little, might result in the overturn of the internationalization endeavors of the leading family member.
  10. An optimal partner for a family firm has existing channels and networks in the foreign market, is trustworthy, experienced and knowledgeable, and similar in terms of size, product portfolio and identity.

The list of managerial recommendations will be updated on a monthly basis via our blog and Facebook account. Stay tuned!

Collaboration

The project is hosted by LUT

The project is funded by the Academy of Finland

International Collaboration

Domestic Collaboration

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Contact Us

Project Lead

Tanja Leppäaho
tanja@ife.fi
+358 40 1919 448

Team Members

firstname@ife.fi