The mixed gamble of internationalization in family and nonfamily firms: The moderating role of organizational slack

• Published in: Global strategy journal 2018-02, Vol.8 (1), p.46-72
• Main Authors: Alessandri, Todd M., Cerrato, Daniele, Eddleston, Kimberly A.
• Format: Article
• Language: English
• Subjects: family firms; family management vs. family ownership; Family owned businesses; Globalization; internationalization; mixed gamble; organizational slack
• ISSN: 2042-5791; 2042-5805
• DOI: 10.1002/gsj.1201

Research Summary: The unique preferences of family firms may lead to internationalization strategies that differ from those of nonfamily firms. Furthermore, heterogeneity among family firms may lead to variation in internationalization. From the mixed gamble perspective, we examine the internationalization of different types of family firms (weak family owned, strong family owned, and family owned and managed), as well as nonfamily firms, considering how differences in family involvement alter the perceptions of potential gains and losses to socioemotional and financial wealth. We also highlight the varying sensitivities of nonfamily firms and types of family firms to the effects of available and recoverable slack. Our findings underscore differences in internationalization strategies among family and nonfamily firms and demonstrate that slack alters the mixed gamble calculus of internationalization for the different types of firms. Managerial Summary: Whether family firms internationalize more or less than nonfamily firms is debated. We aim to reconcile this debate by investigating the extent and breadth of internationalization and home region orientation. We propose that inconsistent results regarding family firms’ internationalization are due to their heterogeneity whereby family ownership and management lead to different preferences. Study results support our framework by demonstrating that while nonfamily firms exhibit the highest levels of internationalization, there is much variance among family firms. Additionally, we demonstrate that financial slack further explains differences between family and nonfamily firms. Our study therefore offers a richer understanding of family and nonfamily firms’ internationalization and reveals significant differences among family firms that suggest family owners and managers view the risks of internationalization differently.