The family as a platform for FSA development: Enriching new internalization theory with insights from family firm research

TY - JOUR

T1 - The family as a platform for FSA development

T2 - Enriching new internalization theory with insights from family firm research

AU - Kano, Liena

AU - Ciravegna, Luciano

AU - Rattalino, Francesco

N1 - Funding Information: We thank owners and managers of family firms featured in this study for generously sharing information with us. We would like to express our sincere gratitude to Prof. Tailan Chi and two anonymous reviewers for their valuable guidance and support. We thank Prof. Birgitte Grøgaard, Prof. Antonio Majocchi, and Prof. Rajneesh Narula for their insightful feedback on the earlier version of the manuscript, and Mattia Bertazzini and Magali Canovi for high-quality research assistance. We gratefully acknowledge financial support of the Social Sciences and Humanities Research Council of Canada (SSHRC), and the Transformative Research Grant provided by the Haskayne School of Business. Publisher Copyright: © 2020, Academy of International Business. Copyright: Copyright 2021 Elsevier B.V., All rights reserved.

PY - 2021/2

Y1 - 2021/2

N2 - This research note links insights from the family firm literature with extant internalization theory-based studies on family firm internationalization to explain how family-owned multinational enterprises (MNEs) can leverage family resources for successful internationalization, and why some family firms are unable to do so. We identify examples of internationally relevant resources contributed by the founding family, namely, social capital, long-term orientation, and reputation. We then differentiate between pre-existing resources that reside at the family level, and firm-specific advantages (FSAs) that reside at the firm level. In order to derive FSAs from family resources, and to profitably exploit those across borders, family MNEs must engage in two types of recombination. First, family and non-family resources are recombined to create actionable FSAs. Second, family-derived FSAs are recombined with location-specific resources in order to respond to differences between home and host country environments. We discuss complementary resources required for each type of recombination and specific mechanisms utilized by family MNEs to integrate those resources. By investigating a potential functional contribution of a family to successful internationalization, we extend prior internalization theory-based work, which focuses predominantly on family firms’ propensity toward bifurcation bias and the constraining effect of this bias on efficient international governance.

AB - This research note links insights from the family firm literature with extant internalization theory-based studies on family firm internationalization to explain how family-owned multinational enterprises (MNEs) can leverage family resources for successful internationalization, and why some family firms are unable to do so. We identify examples of internationally relevant resources contributed by the founding family, namely, social capital, long-term orientation, and reputation. We then differentiate between pre-existing resources that reside at the family level, and firm-specific advantages (FSAs) that reside at the firm level. In order to derive FSAs from family resources, and to profitably exploit those across borders, family MNEs must engage in two types of recombination. First, family and non-family resources are recombined to create actionable FSAs. Second, family-derived FSAs are recombined with location-specific resources in order to respond to differences between home and host country environments. We discuss complementary resources required for each type of recombination and specific mechanisms utilized by family MNEs to integrate those resources. By investigating a potential functional contribution of a family to successful internationalization, we extend prior internalization theory-based work, which focuses predominantly on family firms’ propensity toward bifurcation bias and the constraining effect of this bias on efficient international governance.

KW - bifurcation bias

KW - family firm internationalization

KW - firm-specific advantages

KW - new internalization theory

KW - recombination

UR - http://www.scopus.com/inward/record.url?scp=85082115240&partnerID=8YFLogxK

U2 - 10.1057/s41267-020-00308-y

DO - 10.1057/s41267-020-00308-y

M3 - Article

AN - SCOPUS:85082115240

SN - 0047-2506

VL - 52

SP - 148

EP - 160

JO - Journal of International Business Studies

JF - Journal of International Business Studies

IS - 1

ER -