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Foreign market exit in family firms: Do historical military and cultural frictions matter?

Author

Listed:
  • Wu, Sihong
  • Chirico, Francesco
  • Fan, Di
  • Ding, Jiayan
  • Su, Yiyi

Abstract

In a fast-changing world, strategic decisions to exit a foreign market become more complex for family firms, owing to their vulnerability to uncertainty in internationalization. However, there is scant research on family firms’ foreign market exit with respect to their responses to contextual influences from home and host countries. This study reconciles the socioemotional wealth (SEW) perspective and the friction lens to address this gap. Using a sample of 1,455 subsidiaries established by 413 Chinese family firms in 2009-2018, we find that historical military friction increases family firms’ foreign market exit, while cultural friction leads to a lower exit propensity. We also find that family management reinforces the friction-exit relationships, and this effect is strengthened when the family firm is controlled by the first generation. Our theory and related findings deepen our understanding of the foreign market exit decision of family firms while offering important theoretical and managerial implications.

Suggested Citation

  • Wu, Sihong & Chirico, Francesco & Fan, Di & Ding, Jiayan & Su, Yiyi, 2024. "Foreign market exit in family firms: Do historical military and cultural frictions matter?," Journal of World Business, Elsevier, vol. 59(1).
    • Handle: RePEc:eee:worbus:v:59:y:2024:i:1:s1090951623000792
    DOI: 10.1016/j.jwb.2023.101504
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