The Role of Family Firms Heterogeneity on the Internationalisation and Performance Relationship

Laura Rienda; Rosario Andreu

doi:10.24310/ejfbejfb.v11i2.10591

Authors

Laura Rienda University of Alicante, Spain Spain https://orcid.org/0000-0002-1940-4035
Rosario Andreu University of Alicante, Spain Spain https://orcid.org/0000-0003-1912-9181

DOI:

https://doi.org/10.24310/ejfbejfb.v11i2.10591

Keywords:

Family involvement, Heterogeneity, Performance, Internationalisation, Spanish hotel industry

Agencies: NO

Abstract

Many papers have addressed the influence of different characteristics of family businesses on strategic decisions, including those of internationalisation. However, little is known about the relationship between the internationalization of family firms and firm profitability. For this reason, from the socioemotional wealth perspective, in this paper, we focus on the moderating role of some heterogeneous characteristics of family firms on the relationship between internationalisation and business performance. Specifically, we analyse a sample of 76 companies belonging to the Spanish hotel industry, one of the most internationalised sectors and with a large presence of family businesses. The results show that family involvement in ownership and management, as well as generation, moderates the relationship between internationalisation and profitability in the Spanish hotel industry.

Downloads

Download data is not yet available.

Metrics

Metrics Loading ...

References

Abdellatif, M., Amann, B., & Jaussaud, J. (2010). Family versus nonfamily business: A comparison of international strategies. Journal of Family Business Strategy, 1, 108-116.

Alayo, M., Maseda, A., Iturralde, T., Arzubiaga, U. (2019). Internationalization and entrepreneurial orientation of family SMEs: The influence of the family character. International Business Review, 28, 48-59.

Altinay, L. (2005). Factors influencing entry mode choices: Empirical findings from an international hotel organisation. Journal of Hospitality & Leisure Marketing, 12, 5-28.

Anderson, R.C., & Reeb, D.M. (2003). Founding family ownership and firm performance. Journal of Finance, 58, 1301-1329.

Andreu, R., Claver, E., Quer, D., & Rienda, L. (2020). Family involvement and Spanish hotel chains’ entry modes abroad. Current Issues in Tourism, 23(11), 1375-1393.

Aronoff, C.E. (1998). Megatrends in family business. Family Business Review, 11, 181-186.

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, 4, 801-831.

Astrachan, J.H., & Kolenko, T.A., 1994. A Neglected Factor Explaining Family Business Success: Human Resource Practices. Family Business Review, 7, 251-262.

Assaf, A.G., Josiassen, A., & Oh, H. (2016). Internationalization and hotel performance: The missing pieces. Tourism Economics, 22(3), 572-592.

Beck, L., Janssens, W., Debruyne, M., & Lommelen, T. (2011). A study of the relationships between generation, market orientation, and innovation in family firms. Family Business Review, 24(3), 252–272.

Bobillo, A.M., Rodríguez-Sanz, J.A., & Tejerina-Gaite, F. (2013). Shareholder activism and internationalization in the family firm. Journal of Business Economics and Management, 14(5), 867-885.

Brida, J. G., Driha, O., Ramón-Rodríguez, A.B., & Scuderi, F. (2015). Dynamics of internationalisation of the hotel industry: The case of Spain. International Journal of Contemporary Hospitality Management, 27, 1024–1047.

Brida, J. G., Ramón-Rodriguez, A. B., Such-Devesa, M. J., & Driha, O. (2016). The inverted-U relationship between the degree of internationalization and the performance: The case of Spanish hotel chains. Tourism Management Perspectives, 17, 72–81.

Buckley, P.J., & Casson, M. (1976). The future of the multinational enterprise. London: MacMillan.

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, 134-151.

Caves, R. (1971). International corporations: The industrial economics of foreign investment. Economica, 38, 1-27.

Cerrato, D., & Piva, M.C. (2012). The internationalization of small and medium-sized enterprises: the effect of family management, human capital and foreign ownership. Journal of Management & Government, 16, 617-644.

Chen, J.J., & Dimou, I. (2005). Expansion strategy of international hotel firms. Journal of Business Research, 58, 1730-1740.

Chen, Y.-R., Huang, Y.-L., & Chen, C.-N. (2009). Financing constraints, ownership control, and crossborder M&As: Evidence from nine East Asian economies. Corporate Governance: An International Review, 17, 665–680.

Chiu, D-F. (2015). The influences of formal and informal institutions on Taiwanese family-owned firms’ entry mode choice. Advances in Economics and Business, 3, 383-359.

Chrisman, J.J., Chua, J.H., & Litz, R.A. (2004). Comparing the agency cost of family and non-family firms: Conceptual issues and exploratory evidence. Entrepreneurship Theory and Practice, 28, 335-354.

Chua, J. H., Chrisman, J. J., & Sharma, P. (1999). Defining family business by behaviour. Entrepreneurship Theory and Practice, 23, 19-39.

Chua, J. H., Chrisman, J. J., Steier, L.P., & Rau, S.B. (2012). Sources of heterogeneity in family firms: An introduction. Entrepreneurship Theory and Practice, 36, 1103-1113.

Claver, E., Rienda, L., & Quer, D. (2009). Family firms’ international commitment: The influence of family-related factors. Family Business Review, 22, 125–135.

Claver, E., Rienda, L., & Quer, D. (2008). Factores familiares y compromiso internacional: Evidencia empírica en las empresas españolas. Cuadernos de Economía y Dirección de la Empresa, 11, 7–25.

Claver, E., Rienda, L., & Quer, D. (2007). The internationalisation process in family firms: Choice of market entry strategies. Journal of General Management, 33, 1–16.

Cucculelli, M., Mannarino, L. Pupo, V. & Ricotta, F. (2014). Owner?management, firm age, and productivity in Italian family firms. Journal of Small Business Management, 52(2), 325-343.

Davis, J.H., Schoorman, F.D., Mayer, R.C., & Tan, H.H. (2000). The trusted general manager and business unit performance: empirical evidence of a competitive advantage. Strategic Management Journal, 21, 563-576.

De Massis, A., Frattini, F., Kotlar, J., Messeni-Petruzzelli, A., & Wright, M. (2016). Innovation through tradition: Lessons from innovative family businesses and directions for future research. Academy of Management Perspectives, 30, 93-116.

Dunning, J.H., & Kundu, S.K. (1995). The internationalization of the hotel industry - some findings from a field study. Management International Review, 35, 101-133.

Elango, B. (2004). Geographic scope of operations by multinational companies: An exploratory study of regional and global strategies. European Management Journal, 22, 431–441.

Faccio, M., Marchica, M-T., & Mura, R. (2011). Large shareholder diversification and corporate risk-taking. The Review of Financial Studies, 24, 3601-3641.

Fernández, Z., & Nieto, M. J. (2005). Internationalization strategy of small and medium-sized family businesses: Some influential factors. Family Business Review, 18, 77-89.

Filatochev, I., Lien, Y.C., & Piesse, J. (2005). Internationalization strategy of small and medium-sized family business: Some influential factors. Asia Pacific Journal of Management, 22, 257-283.

García de Soto, E., & Vargas, A. (2015). Choice of entry mode, strategic flexibility and performance of international strategy in hotel chains: An approach based on real options. European Journal of Tourism Research, 9, 92–114.

Granata, D., & Chirico, F. (2010). Measures of Value in Acquisitions: Family Versus Nonfamily Firms. Family Business Review, 23, 341-354.

Gómez-Mejía, L., Cruz, C., Berrone, P., & De Castro, J. (2011). The Bind that Ties: Socioemotional Wealth Preservation in Family Firms. Academy of Management Annals, 5, 653-707.

Gómez-Mejía, L., Makri, M., & Larraza-Kintana, M. (2010). Diversification decisions in family-controlled firms. Journal of Management Studies, 47, 223-252.

Grant, R.M. (1987). Multinationality and performance among British manufacturing companies. Journal of International Business Studies, 18, 79-89.

Grant, R.M., Jammine, A.P., & Thomas, H. (1988). Diversity, diversification, and profitability among British manufacturing companies. Academy of Management Journal, 31, 771-801.

Graves, C., & Thomas, J. (2004). Internationalisation of the family business: A longitudinal perspective. International Journal of Globalisation and Small Business, 1, 7-27.

Graves, C., & Thomas, J. (2006). Internationalization of Australian family businesses: A managerial capabilities perspective. Family Business Review, 21, 151-167.

Graves, C., & Thomas, J. (2008). Determinants of the Internationalization Pathways of Family Firms: An Examination of Family Influence. Family Business Review, 21(2), 151-167.

Hofstede, G. (1980). Culture´s Consequences. International Differences in Work-Related Values. Newbury Park-California: Sage Publications.

Johnson, C., & Vanetti, M. (2005). Locational strategies of international hotel chains. Annals of Tourism Research, 32, 1077-1099.

Kim, Y., & Gao, F.Y. (2013). Does family involvement increase business performance? Family-longevity goals’ moderating role in Chinese family firms. Journal of Business Research, 66, 265-274.

Kraus, S., Mensching, H., Calabrò, A., Cheng, C-F., & Filser, M. (2016). Family firm internationalization: A configurational approach. Journal of Business Research, 69, 5473-5478.

Kundu, S.K., & Contractor, F.J. (1999). Country location choices of service multinationals: An empirical study of the international hotel sector. Journal of International Management, 5, 299-317.

Lee, S., Upneja, A., Özdemir, Ö, & Sun, K-A. (2014). A synergy effect of internationalization and firm size on performance. US hotel industry. International Journal of Comtemporary Hospitality Management, 26, 35-49.

León-Darder, F., Villar-García, C., & Pla-Barber, J. (2011). Entry mode choice in the internationalisation of the hotel industry: a holistic approach. The Service Industries Journal, 31, 107-122.

Levy, H., & Sarnat, M. (1970). International diversification of investment portfolios. The American Economic Review, 60, 668-675.

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, 126-141.

Lu, J.W., & Beamish, P.W. (2004). International diversification and firm performance: The S-curve hypothesis. Academy of Management Journal, 47, 598-609.

Lu, Z., & White, H. (2014). Robustness checks and robustness tests in applied economics. Journal of Econometrics, 178(1), 194–206.

Mazzi, C. (2011). Family business and financial performance: Current state of knowledge and future research challenges. Journal of Family Business Strategy, 2, 166-181.

Mensching, H., Calabrò, A., Eggers, F., & Kraus, S. (2016). Internationalization of family and non-family firms: A conjoint experiment among CEOs. European Journal of International Management, 10, 581-604.

Miller, D., & Le Breton-Miller, I. (2006). Family governance and firm performance: Agency, stewardship and capabilities. Family Business Review, 19, 73-87.

Miller, D., Le Breton-Miller, I., & Lester, R.H. (2010). Family ownership and acquisition behavior in publicly-traded companies. Strategic Management Journal, 31, 201-223.

Miller, D., Le Breton-Miller, I., & Scholnick, B. (2008). Stewardship vs. stagnation: An empirical comparison of small family and non-family businesses. Journal of Management Studies, 45, 51-78.

Morck, R., Strangel, D.A., & Yeung, B. (2000). Inherited wealth, corporate control and economic growth: The Canadian disease. In R. Morck (Ed.), Concentrated corporate Ownership (pp. 319–369). Chicago: University of Chicago Press.

Navasivayam, K., Miao, L., & Zao, X. (2007). An investigation on the relationship between compensation practices and firm performance in the US hotel industry. International Journal of Hospitality Management, 26, 574-587.

Pangarkar, N. (2008). Internationalization and performance of small- and medium- sized enterprises. Journal of World Business, 43, 475-485.

Pearson, A.W., Carr, J.C., & Shaw, J.C. (2008). Toward a theory of familiness: A social capital perspective. Entrepreneurship Theory and Practice, 32, 949-969.

Peng, M.W, & Jiang, Y. (2010). Institutions Behind Family Ownership and Control in Large Firms. Journal of Management Studies, 47(2), 253-273.

Pla Barber, J. & León Darder, F. (2004). La internacionalización de la industria hotelera española. Formas de entrada y factores determinantes. Papeles de Economía Española, 102, 193-206.

Plá-Barber, J., León-Darder, F., & Villar, C. (2011). The internationalization of soft-services: Entry modes and main determinants in the Spanish hotel industry. Service Business, 5, 139–154.

Pongelli, C., Carolli, M.G., & Cucculelli, M. (2016). Family business going abroad: the effect of family ownership on foreign market entry mode decisions. Small Business Economics, 47, 787-801.

Pukall, T. J., & Calabrò, A. (2014). The internationalization of family firms: A critical review and integrative model. Family Business Review, 27, 103–125.

Ramón, A. (2002). Determining factors in entry choice for international expansion. The case of the Spanish hotel industry. Tourism Management, 23(6), 597-607.

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, 73-105.

Rienda, L., Claver, E., & Andreu, R. (2020). Family involvement, internationalisation and performance: An empirical study of the Spanish hotel industry. Journal of Hospitality and Tourism Management, 42, 173-180.

Rienda, L., Claver, E., & Andreu, R. (2021). Internationalisation and family involvement: A Stewardship approach in the hotel industry, in Leppäaho, T. & Jack, S. (Eds): Handbook on Family Firm Internationalisation, Palgrave McMillan, forthcomming.

Ruigrok, W., & Wagner, H. (2003). Internationalization and performance: an organizational learning perspective. Management International Review, 43, 63-83.

Sainaghi, R. (2011). RevPAR determinants of individual hotels: Evidences from Milan. International Journal of Contemporary Hospitality Management, 23(3), 297-311.

Sciacia, S., Mazzola, P., Astrachan, J.H., & Pieper, T.M. (2012). The role of family ownership in international entrepreneurship: Exploring nonlinear effects. Small Business Economics, 38, 15-31.

Segaro, E.L., Larimo, J., & Jones, M.V. (2014). Internationalisation of family small and medium sized enterprises: The role of stewardship orientation, family commitment culture and top management team. International Business Review, 23, 381-395.

Sonfield, M.C., & Lussier, R.N. (2004). First-, second-, and third-generation family firms: A comparison. Family Business Review, 17, 189-202.

Sraer, D., & Thesmar, D. (2007). Performance and Behavior of Family Firms: Evidence from the French Stock Market. Journal of the European Economic Association, 5, 709–751.

Strike, V.M., Berrone, P., Sapp, S.G., & Congiu, L. (2015). A Socioemotional Wealth Approach to CEO career horizons in family firms. Journal of Management Studies, 52, 555-583.

Schwartz, Z., Altin, M., & Singal, M. (2017). Performance measures for strategic revenue management: RevPAR versus GOPPAR. Journal of Revenue and Pricing Management, 16, 357–375.

Tallman, S. & Li, J. (1996). Effects of International Diversity and Product Diversity on the Performance of Multinational Firms. Academy of Management Journal, 39(1), 179-196.

Villalonga, B., & Amit, R. (2006). How do family ownership, control and management affect firm value? Journal and Financial Economics, 80, 385-417.

Wenerfelt, B. (1984). A resource?based view of the firm. Strategic Management Journal, 5, 171-180.

Westhead, P., & Howorth, C. (2006). Ownership and management issues associated with family firm performance and company objectives. Family Business Review, 19, 301-319.

Westhead, P., Howorth, C., & Cowling, M. (2002). Ownership and management issues in first and multi-generation family firms. Entrepreneurship and Regional Development, 14, 247-269.

Xiao, Q., O’Neill, J.W., & Mattila, A.S. (2012). The role of hotel owners: The influence of corporate strategies on hotel performance. International Journal of Contemporary Hospitality Management, 24, 122-139.

Zahra, S.A. (2003). International expansion of U.S. manufacturing family businesses: the effect of ownership and involvement. Journal of Business Venturing, 18, 495-512.

Zahra, S. A. (2005). Entrepreneurial risk taking in family firms. Family Business Review, 18(1), 23-40.

Zahra, S.A., Hayton, J.C., Neubaum, D.O., Dibrell, C., & Craig, J. (2008). Culture of family commitment and strategic flexibility: The moderating effect of stewardship. Entrepreneurship Theory and Practice, 32, 1035-1054.

Zellweger, T.M., Kellermanns, F.W., Chrisman, J.J., & Chua, J.H. (2012): Family control and family firm valuation by family CEOs: The importance of intentions for transgenerational control. Organization Science, 23, 851-868.