The Determinants of International Performance for Family Firms: Understanding the Effects of Resources, Capabilities, and Market Orientation

Abstract

Abstract Family firms (FFs) tend to display specific characteristics that differentiate them from non-family companies. In addition to the importance that FFs hold for the economic structure of many countries, their characteristics have motivated a wide range of research studies, including succession, corporate governance, and strategic management. The purpose of this study is to examine the role of resources (i.e. internationalisation networks), capabilities (i.e. employee characteristics and knowledge), and market orientation (i.e. internationalisation motivations), and how these facets influence the international performance of FFs. To this end, we administered a web-based questionnaire to a sample of 212 small and medium-sized FFs based in Portugal. In terms of the research methodology, we applied structural equation modelling (SEM) to test our hypotheses. We found that not only do resources and capabilities return a positive impact on internationalisation motivations, but also the combination of resources and capabilities and internationalisation motivations can positively influence the international performance of FFs. Our research contributes both to theory and FF management practises by analysing the strategic orientations adopted in internationalisation processes and the empirical relevance held by resources and capabilities. More specifically, we find that proactivity (i.e. internationalisation motivations), a network of contacts (i.e. resources) and assuming risks, mitigated by knowledge about the external market (i.e. capabilities), can enable the achievement of superior international performance for FFs.