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The international expansion of family firms: The moderating role of internal financial slack and external capital availability


The prudential use of external financial capital and the desire to maintain internal slack reflect unique characteristics of family firms that focus on preserving socioemotional wealth. This study extends previous findings by demonstrating that external capital availability and internal slack can either provide the financial support for family firms to remain committed to socioemotional wealth or to motivate those firms to engage in foreign expansion. The results from a sample of 640 firms based in 19 different countries during the period of 2008 to 2012 suggest that there is less probability of family firms expanding into foreign countries when the home country’s capital availability is high, when the host country’s capital availability is low, or when the internal financial slack is high. The research also explores interactions between external capital availability and internal financial slack. The theoretical model and empirical tests contribute to understanding of family firms’ internationalization, and they provide a strong catalyst for future research on family firms.

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  1. 1.

    One standard deviation above and below the mean of external resource slack in the home country is used because only these values are in the range of possible values of external resource slack in the home country.

  2. 2.

    The small magnitude of the measure of resource slack requires the use of one-tenth-unit of change instead of one unit of change in resource slack.


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Xu, K., Hitt, M.A. The international expansion of family firms: The moderating role of internal financial slack and external capital availability. Asia Pac J Manag (2018).

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  • Family firms
  • International expansion
  • External capital
  • Internal slack