Behind the internationalization of family SMEs: A strategy tripod synthesis

• Author: Somnath Lahiri,Debmalya Mukherjee,Mike W. Peng
• Published date: 01 November 2020
• DOI: http://doi.org/10.1002/gsj.1376
• Date: 01 November 2020

RESEARCH ARTICLE

Behind the internationalization of family SMEs:

A strategy tripod synthesis

Somnath Lahiri

1

| Debmalya Mukherjee

2

| Mike W. Peng

3

1

Department of Management and Quantitative Methods, College of Business, Illinois State University, Normal, Illinois

2

Department of Management, College of Business Administration, The University of Akron, Akron, Ohio

3

Center for Global Business, Jindal School of Management, University of Texas at Dallas, Richardson, Texas

Correspondence

Debmalya Mukherjee, Department of

Management, College of Business

Administration, The University of Akron,

259 South Broadway, Akron, OH 44325.

Email: dmukher@uakron.edu

Funding information

The University of Akron, Faculty

Research Grant, Grant/Award Numbers:

1829, 207341; The Jindal Chair,

University of Texas at Dallas

Abstract

Research Summary: We review and synthesize the

growing literature concerning the internationalization

of small and medium-sized family enterprises (family

SMEs) around a strategy tripod framework. In doing so,

we identify various resource-based, institution-based,

and industry-based factors that contribute to family

SME internationalization endeavors. We also pinpoint

possible home-country-level and host-country-level

institutional and industry-based structural–cultural

contingencies that may interact with family SME

resource-based factors to accentuate or impede their

internationalization. Moreover, we highlight different

behavioral orientations as crucial missing links that

characterize the family SME internationalization schol-

arship. Overall, our comprehensive synthesis of the lit-

erature sheds light on how internationalization

strategies of family SMEs vary based on important

drivers and contextual influences captured in our tripod

framework.

Managerial Summary: Family SMEs are distinct in

that they possess the attributes of family businesses

(family ownership and control) as well as those of

SMEs (smallness, flexibility, and resource constraints).

Managing these attributes may be difficult when it

comes to executing important strategies such as

Received: 12 December 2018 Revised: 17 February 2020 Accepted: 24 February 2020

DOI: 10.1002/gsj.1376

Global Strategy Journal. 2020;10:813–838. wileyonlinelibrary.com/journal/gsj ©2020 Strategic Management Society 813

internationalization. Family SMEs, therefore, need to

be cognizant of various factors that can potentially

impact their internationalization planning and success.

The strategy tripod framework that we develop can pro-

vide guidance to managers in considering how

resource-based, institution-based, and industry-based

factors drive family SME internationalization. Our inte-

grative framework endeavors to help managers realize

how their internationalization strategies and the resul-

tant outcomes will vary depending on how they man-

age the three factors.

KEYWORDS

family firm, family SMEs, internationalization, review, strategy tripod

1|INTRODUCTION

Family-owned and managed small and medium-sized enterprises (hereafter “family SMEs”) are

central to the local economies around the world (D'Angelo, Majocchi, & Buck, 2016). An impor-

tant theme in this literature relates to understanding what drives their internationalization

(Arregle, Duran, Hitt, & van Essen, 2017; Bauweraerts, Sciascia, Naldi, & Mazzola, 2019;

Hennart, Majocchi, & Forlani, 2019). Two important factors distinguish family SMEs from their

nonfamily counterparts. First, owing to “familiness,”family SMEs, when compared with

nonfamily counterparts, have different risk-taking propensities, organizational goals, and

investment preferences (De Massis, Frattini, Majocchi, & Piscitello, 2018; Kotlar, Fang, De Mas-

sis, & Frattini, 2014; Memili, Fang, Chrisman, & De Massis, 2015). Family SME managers tend

to be conservative and risk-averse as they perceive that internationalization may result in loss

of business control, family wealth, family reputation, social status, and heightened possibilities

of family conflicts (Arregle, Naldi, Nordqvist, & Hitt, 2012; Carney, van Essen, Gedajlovic, &

Heugens, 2015). Second, due to their “smallness,”these firms are more resource-constrained.

Such limitations lead to a lack of relevant managerial capabilities (Fernández & Nieto, 2006)

that are crucial for managing complexities abroad. However, at the same time, family SMEs are

also more flexible than larger firms and possess less organizational inertia, features that may

prove helpful in tapping into international opportunities (Schwens, Eiche, & Kabst, 2011).

Internationalization can result in significant benefits to firms, such as leveraging existing

assets, achieving economies of scope, managing fluctuations in revenue generation, and becom-

ing stronger at home (Lu & Beamish, 2001; Sirmon, Arregle, Hitt, & Webb, 2008). However, it

also involves significant resource commitment as well as overcoming various risks and com-

plexities associated with unfamiliar locations and higher demands on managerial capabilities

(Fernández & Nieto, 2006; Hsu, Chen, & Cheng, 2013).

What determines the internationalization endeavors of family SMEs? In addressing this

important question, scholars have explored the antecedents, processes, and outcomes of family

SME internationalization (Arregle et al., 2012; Carney et al., 2015; Hennart et al., 2019;

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