Exploring the role of family ownership in internationalization: empirical investigation of Indian firms

Abstract

Purpose Internationalization is an important strategy for the long-term survivability of the firms and is often influenced by the ownership groups along with the family involvement in the management decisions. The purpose of this study is to investigate empirically the outward propensities of various ownership groups such as foreign institutional investors, domestic mutual funds and lending institutions. Design/methodology/approach This paper analyzes the moderating effects of the family’s influence on the relationship between various ownership categories and internationalization, which is measured in terms of foreign investments and export intensity. An analysis of listed non-financial Indian firms recorded during the years 2005–2019, constituting a panel of 43,928 firm-year observations was conducted by using the tobit and probit panel regression models. Findings The results demonstrate that internationalization of the firm is positively impacted by the foreign institutional investors and lending institutions. However, when the family ownership is moderated across the ownership categories, it can be seen that it negatively impacts the lending institutions and positively impacts the foreign institutional investors. In the case of mutual funds, no impact of family ownership in the firm’s foreign investment decisions can be seen. Originality/value As there are limited studies about family ownership influence on the firm’s internationalization decision in the context of India, this paper takes an inclusive approach to the changing nature of the influence of ownership on the international expansion process.

The Role of Family Ownership on Internationalization Strategies

“…In a more globalized economy, internationalization is seen as an opportunity for enterprises to grow and prosper (Calabrò et al 2013). Although this process might be more difficult for FBs due to the specific characteristics of this kind of firm, the literature is still divided as to whether the impact of family ownership positively or negatively affects the different stages of internationalization of the firm (Andreu et al 2020;Benito-Hernandez et al 2014;Calabrò et al 2013;Cerrato and Piva 2012;Costa 2022;Evert et al 2018;Nieto 2005, 2006;Manogna and Mishra 2021;Varas-Fuente et al 2022;Zahra 2003). At present, all enterprises, independent of their size, country, or industry, must be prepared for growing competition due to increasing internationalization (Cerrato and Piva 2012).…”

“…Family businesses (hereafter FB) are critical in the European entrepreneurial fabric, representing around 60% of all enterprises, constituting over 40 to 50% of the total employment (European Family Businesses 2016). Additionally, they are key contributors to local economies worldwide (Manogna and Mishra 2021). Therefore, it is essential to understand the process by which these companies approach the international market and their advantages and hindrances.…”

“…However, FBs possess distinctive traits that can influence their international strategies compared to non-family businesses (hereafter NFB) (Andreu et al 2020). The impact of FBs on internationalization is still not consensual, with a growing body of research still trying to find a general agreement (Almodóvar et al 2016;Andreu et al 2020;Baronchelli et al 2016;Benito-Hernandez et al 2014;Calabrò et al 2013;Cerrato and Piva 2012;Costa 2022;Evert et al 2018;Nieto 2005, 2006; Graves and Shan 2014;Graves and Thomas 2004;Lu et al 2015;Manogna and Mishra 2021;Piva et al 2013;Singh and Kota 2017;Varas-Fuente et al 2022;Zahra 2003).…”

Ownership structure and corporate social responsibility in India: empirical investigation of an emerging market

“…These firms in the emerging markets need attention different from the developed economies, where most of the recent work in CSR has been carried on (Peters et al, 2011). The prominence of family and business group ownerships in the corporate landscape of emerging economies provides a scenario different from that of a developed economy (Manogna and Mishra, 2020a). These groups offer a wide range of ownership characteristics where family and business groups coexists along with the institutional investors in guiding the decisions and priorities of the firm, thus resulting in outcome of investment choices such as CSR spend among others (Ramaswamy et al, 2002;Lukason and Vissak, 2020).…”

Agricultural production efficiency of Indian states: Evidence from data envelopment analysis

“…However, the overall effective return to the farmers appeared low and subsidizing these has been one of most challenging policy debates in developing countries. The agricultural production problems can be seen as arising from increasing input costs in prevailing years, low yield, decreasing land sizes, and inefficiency in production and ultimately leading to higher production cost (R L & Mishra, 2020b;Yadava, 2017). Considering the optimization of agricultural production by farmers at state level, this study is providing an overview of the efficiency analysis of agricultural yield (production) and input usage by Indian states.…”