Abstract
We explore how family-owned small and medium-sized enterprises (SMEs) control their investments abroad: through full ownership (wholly owned subsidiaries) or sharing the ownership with other partners (joint ventures). Focusing on the role of family control (family members as CEO and/or board chair) and three dimensions of distance (cultural, geographic, and institutional) to explain this choice, we analyze 1475 foreign subsidiaries owned by 701 family SMEs and find that cultural, geographic, and institutional distance affect the choice of ownership mode in different ways. Moreover, family control moderates the relationship between distance and foreign ownership mode in the case of cultural and institutional distance, but not in that of geographic distance. Our study contributes to the international business literature by helping to explain the effect of distance on foreign ownership mode choice and by highlighting the importance of the characteristics of main decision makers. The paper also contributes to the literature on family business, shedding light on the role of family control in family SMEs’ foreign ownership mode choice. We thereby offer new insights into the preferences of family leaders and explain how, under certain conditions, when family members cover a central role in the governance, the foreign ownership modes differ.
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Acknowledgements
We thank Professor Michael-Jörg Oesterle for his editorial guidance and two anonymous reviewers for their very insightful suggestions during the review process. We would like to thank Gianpaolo Baronchelli for his support in the initial phase of this work and Federica Viganò for her competent assistance in data collection. We also thank participants to the 2017 EIBA conference (Milan, Italy) and the research workshop “Exploring the relationships between innovation and internationalisation of family firms across Europe” (Trento, Italy) for their feedback. We are grateful to the University of Bergamo and the University of Milano - Bicocca for supporting this research.
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Del Bosco, B., Bettinelli, C. How Do Family SMEs Control Their Investments Abroad? The Role of Distance and Family Control. Manag Int Rev 60, 1–35 (2020). https://doi.org/10.1007/s11575-019-00406-6
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DOI: https://doi.org/10.1007/s11575-019-00406-6