Internationalization of Small Family Firms: The Influence of Family from a Socioemotional Wealth Perspective

Abstract

We explore the factors influencing the internationalization of small family firms. Based on interviews with six family firms in Singapore, we highlight the importance of (1) family harmony, (2) trust in external relationships, (3) social and business networks, and (4) organizational resources and capabilities in the internationalization process. We show how the socioemotional wealth factors of trust and harmony affect networking and resources, which in turn affect internationalization. We find that initial internationalization through exports is enabled through trust in family networks, but the typical family characteristics of a desire to maintain family harmony and distrust of outsiders have a negative impact on network creation and resource development, which constrains the extent to which the firm internationalizes beyond exporting. In order to move from the first stage (exports/similar markets) to the second stage (joint ventures/different markets) of internationalization, less emphasis on trust and family harmony accompanied by more emphasis on building external networks and resources may be necessary. We propose a new model of internationalization of family firms based on our findings. © 2015 Wiley Periodicals, Inc.

A socioemotional wealth perspective on how collaboration intensity, trust, and international market knowledge affect family firms’ multinationality

“…Considering the dominance of SEW in family firms enables us to make a theoretical contribution extending and contextualizing the elements found in Johanson and Vahlne's (2009) revised Uppsala Model to family firms. We thus offer a new causal mechanism to this model, SEW, and theoretically explain and empirically exception see Scholes et al [2015]) demonstrate the relationships among collaboration intensity, international market knowledge, trust, and family firm multinationality. Bringing insights from SEW into internationalization theory resolves the shortcoming that present internationalization theories do not sufficiently account for the nonfinancial priorities of family firms in their predictions of internationalization.…”

“…In this respect, we also shed new light on the role of trust and its effect on family firm internationalization. Family firms might consider internationalization strategies that involve high levels of trust in order to preserve their SEW endowment, which may have positive or negative effects on internationalization (Scholes, Mustafa, & Chen, 2015). We reveal this to be in the form of a moderation effect on the accumulation of knowledge though collaboration intensity as a driver of greater multinationality.…”

“…Family firms bias participating in networks in which trust is prevalent (Cooper et al, 2005;Eddleston et al, 2010) as a way to further protect SEW. Trust is also related to SEW through binding social ties and studies have found that family firms will even abandon internationalization activity altogether if trust with its network partners is absent (Scholes et al, 2015). Johanson and Vahlne (2009) theorize that trust and commitment to the relationship (through high collaboration intensity) are prerequisites for successful learning and we expect this to hold true for family firms, but only when trust is high.…”

“…Trust is one of the most important mechanisms to facilitate inter-firm cooperation and is crucial in family firms' activities (Scholes et al, 2015). Mutual trust and the pursuit of common long-term term strategic goals enable the network participants to establish sustainable international, trust-based relationships with low conflict rates (Scholes et al, 2015).…”

“…Mutual trust and the pursuit of common long-term term strategic goals enable the network participants to establish sustainable international, trust-based relationships with low conflict rates (Scholes et al, 2015). In such a network where trust is prevalent, trust will allow the family firm to accept and leverage the knowledge of their network partners, moderating the extent to which collaboration intensity accumulates international market knowledge.…”