How Do Family SMEs Control Their Investments Abroad? The Role of Distance and Family Control

Barbara Del Bosco () and Cristina Bettinelli
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Barbara Del Bosco: University of Milano - Bicocca
Cristina Bettinelli: University of Bergamo

Management International Review, 2020, vol. 60, issue 1, No 1, 35 pages

Abstract: 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.

Keywords: Family control; Joint venture; Wholly owned subsidiaries; Ownership-mode choice; FDI; Socioemotional wealth (SEW) perspective (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (13)

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DOI: 10.1007/s11575-019-00406-6

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