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Internationalization and family ownership. Does the life-cycle of destination markets matter?

Author

Listed:
  • Marco Cucculelli

    () (Dipartimento di Scienze Economiche e Sociali - Universita' Politecnica delle Marche)

  • Yu Sun

    () (London School of Economics and Political Science)

  • Yi Zhu

    () (mail: Universite' Catholique de Louvain (Belgium) and Universita' Politecnica delle Marche)

Abstract

Despite the conventional view on family firms that are slow to venturing into foreign markets, Hennart et al. (J Int Bus Stud, 2019) show that family firms in high-quality niche businesses are able to overcome the internationalization barriers. Eddleston et al. (J Int Bus Stud, 2019) counterpoint it by arguing that the effect only conditionally holds when external and internal contexts are considered, specified as pro-market development and professionalization practices respectively. We extend Hennart et al.'s (2019) and Eddleston et al'i.s (2019) research by explicitly considering the heterogeneity in the life-cycle of destination markets. Specifically, we show that family firms, no matter selling niche or mass products, are encouraged to internationalize given satisfactory market growth potential - an external context, as in Eddlelston et al. 2019. We develop a two-period competition model with logistic market growth to assess the role of the life cycle of export markets on the decision to entry. The empirical evidence shows that family firms are more likely to enter markets with high growth potential in their early stages of development. We also test a pricing-to-market model to show that a replication strategy, which consists of exporting products already sold in domestic markets, is a viable entry strategy for (price-taking) family firms.

Suggested Citation

  • Marco Cucculelli & Yu Sun & Yi Zhu, 2020. "Internationalization and family ownership. Does the life-cycle of destination markets matter?," Mo.Fi.R. Working Papers 159, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
  • Handle: RePEc:anc:wmofir:159
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    internationalization; family firms; life-cycle; potential market growth; replication strategy; mass and niche products;

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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