The internationalization of family-firms: a signal detection approach

Giacomo Laffranchini, John S. Hadjimarcou, Si Hyun Kim, Mike Braun

Research output: Contribution to journalArticlepeer-review

Abstract

Purpose: The purpose of this paper is to explore the internationalization process of small and medium family-owned businesses (FOBs). The authors strive to explain the extent to which family business CEOs identify a signal in either the domestic or international environment for internationalization as a viable business opportunity. Design/methodology/approach: The authors rely on signal detection theory to develop a conceptual model that explains the cognitive process inducing the CEO-founder of an FOB to discover and exploit an opportunity in the international market. Findings: The conceptual model proposes that constraints in a family-firm’s domestic market, as well as opportunities in the foreign market act, as signal strength. However, family business CEO-founders’ centrality and inward orientation might lead them to ignore a signal by generating noise and reducing the motivation to collect further information concerning the trustworthiness of the signal. Research limitations/implications: The model is conceptual; future research should strive for a potential way to operationalize the cognitive process described herein. In addition, the theoretical argument has been developed in the context of family firms wherein the founder plays a pivotal role. Future research may extend the theoretical arguments to those family firms that are at an advanced stage of development. Originality/value: The study reconciles conflicting findings concerning the internationalization of FOBs. In doing so, the authors employ an interdisciplinary approach and develop a conceptual model that sheds additional light on the cognitive processes underlying internationalization decisions among founder-centered family firms.

Original languageEnglish
Pages (from-to)291-309
Number of pages19
JournalJournal of Family Business Management
Volume6
Issue number3
DOIs
StatePublished - Oct 10 2016

Keywords

  • Founder centrality closeness
  • Founder inward orientation
  • Founder-centered family firms
  • Signal detection theory

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