This version of the article has been accepted for publication, after peer review (when applicable) and is subject to Springer Nature's AM terms of use, but is not the Version of Record and does not reflect post-acceptance improvements, or any corrections.

This article investigates how Indian pharmaceutical firms, facing discontinuous institutional changes in their domestic environment due to economic liberalization and intellectual property reforms, have undertaken organizational transformation. Internationalization of resources and product markets constitutes an important component of organizational transformation for local firms in emerging economies. Using longitudinal data on 206 Indian pharmaceutical firms from 1995–2004, we find that firms' access to international technological and financial resources enables product market internationalization. Furthermore, we theorize and find support for our predictions that the association between international resources and markets is conditioned by time and business group affiliation, and product market internationalization affects financial performance. Several implications thus emerge for theory and practice associated with the sources of competitiveness in emerging economy firms and their transformation into globally competitive multinational firms.

Research Summary: We investigate whether and how family ownership and management influence firms' internationalization strategies in an emerging economy in which family firms are dominant. Anchoring on the willingness and ability framework and drawing on the socioemotional wealth perspective and agency theory, we theorize how the heterogeneity among family firms in their ownership structures, concentration, and family involvement in management shapes the firms' internationalization strategies. We also theorize how certain contingencies, such as the presence of foreign institutional ownership and family management, moderate the relationship between family ownership and internationalization strategy. We test our predictions by using a proprietary, longitudinal panel dataset of 303 leading family firms from India and find support for most of our theoretical predictions. Managerial Summary: Internationalization has emerged as a dominant strategy for firms in a globally interconnected world. We observe that ownership structure and management have significant bearing on internationalization strategies of family firms, as family owners and managers are more averse to internationalization. Family firms' aversion to internationalize is more pronounced when families can exercise greater control on firms' actions through the combined effect of higher family ownership (primarily through strategic control) and family's participation in management (through strategic, administrative, and operational control). However, certain contingencies, such as the higher ownership of foreign institutions and presence of professional managers, help business families improve their understanding of international markets, reduce the fear of the unknown, and better appreciate the benefits of internationalization, thereby aiding greater internationalization of family firms.

This version of the article has been accepted for publication, after peer review (when applicable) and is subject to Springer Nature's AM terms of use, but is not the Version of Record and does not reflect post-acceptance improvements, or any corrections.

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