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Family Firms' International Commitment : The Influence of Family-Related Factors

Enrique Claver, Laura Rienda and Diego Quer Family Business Review 2009 22: 125 originally published online 5 March 2009 DOI: 10.1177/0894486508330054 The online version of this article can be found at: http://fbr.sagepub.com/content/22/2/125

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Family Firms International Commitment

The Influence of Family-Related Factors
Enrique Claver Laura Rienda Diego Quer
University of Alicante, Spain

Family Business Review Volume 22 Number 2 June 2009 125-135 2009 Family Firm Institute, Inc. 10.1177/0894486508330054 http://fbr.sagepub.com

Few studies have dealt with family businesses and internationalization theories. The aim of this article is to bridge this gap by examining the family-related factors that have an impact on the international commitment level of these companies. From a sample of Spanish family firms, findings show that long-term vision and the presence of nonfamily managers are positively related to entry modes involving stronger international commitment, although self-financing limits this commitment. Keywords: family firms; international commitment; family factors

t is becoming more and more evident that markets tend toward a greater level of globalization, characterized by a wider dissemination of the information that generates a growing homogeneity in consumer tastes and preferences worldwide. This in turn leads to an increased number of integration and cooperation processes, as well as strategic alliances. A large number of firms and industries have intensified their global orientation in the last few decades, which has made family firms aware of the vast potential of internationalization as an instrument of expansion and growth (Okoroafo, 1999). Internationalization can prove beneficial to the longterm competitiveness of family firms. It allows the organization to access a larger market, achieve economies of scale, diversify risk, or simply avoid competitive disadvantages (Gallo & Sveen, 1991). However, internationalization is not always associated with advantages. In fact, some organizations think that it is better to abandon the idea of undertaking international projects if doing so entails a risk of losing family values, as well as control over the enterprise (Okoroafo, 1999). The review of the literature on the internationalization of family firms reveals that a number of issues need further

research. From a theoretical point of view, few studies have dealt with the determinants of the international commitment of family firms. In addition, few empirical studies have applied a quantitative methodology with primary data to test the family-related factors that play a relevant role in the choice of foreign direct investment as a way to enter markets abroad. This article aims to bridge the gap in two ways. Regarding theory, the objective is to analyze the influence exerted by various family-specific factors on the choice of entry modes involving different degrees of resource commitment: exports, contractual agreements, joint ventures, and wholly owned subsidiaries. From a dynamic perspective of the internationalization process, progress comes with the increased knowledge of foreign markets (Eriksson, Johanson, Majkgard, & Sharma, 1997). Thus, according to the Uppsala model, international expansion appears as a gradual process in terms of knowledge and firm commitment to other markets (Johanson & Vahlne, 1977). From an empirical standpoint, the purpose of this article is to carry out a firm-level statistical analysis, based on primary data, of Spanish family firms involved in international activities.

Literature Review
Authors Note: Address correspondence to Laura Rienda, Department of Management, Faculty of Economics, University of Alicante, Campus San Vicente del Raspeig, E-03080 Alicante (Spain), e-mail: laura.rienda@ua.es.

In the case of family firms, the internationalization process is influenced not only by certain generic factors
125

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126 Family Business Review

both internal and external but also by those associated with the fact that such firms are family-run businesses. Because of the scant literature on the internationalization process of family firms, we have focused on the most outstanding factors related to the nonseparation of ownership and management in these companies. Thus, we have grouped these factors into three blocks that summarize the main issues related to the international commitment of family firms: their reluctance to change and their search for stability and direct control (Donckels & Aerts, 1994; Fernndez & Nieto, 2006; McConaughy, Matthews, & Fialko, 2001; Mishra & McConaughy, 1999; Thomsen & Pedersen, 2000); their managerial features, especially, the successive generations and the role of nonfamily managers (Fernndez & Nieto, 2005, 2006; Gallo & Garca Pont, 1996; Levinson, 1971); and the characteristics of their financial structure, where self-financing and internal financing sources are usually present (Gallo & Vilaseca, 1996; Romano, Tanewski, & Smyrnios, 2001). All these factors are linked to the distinctive features of family firms and can so affect their internationalization process. To our knowledge, previous research has not explored the joint influence of these factors on the international commitment of family firms. When it comes to interpreting the hypotheses presented in this article, stronger international commitment clearly indicates that the enterprise has made progress in its internationalization process by following a sequence that illustrates a gradual increase in the degree of commitment namely, exports, contractual agreements, joint ventures, and wholly owned subsidiaries.

structures, processes, and traditions. All the above leads to a rigid location of resources in some of these firms, which hinders the introduction of the changes required to carry out entrepreneurial activities (Zahra, 2005) or implement internationalization strategies (Gallo & Garca Pont, 1996). In addition, the familys direct control over the firm, with all the privileges that derive from it, may even become an aim in itself for the family business (Allen & Panian, 1982). All this will probably mean less inclination to risk, which in turn leads to less willingness to take chances in markets with which the firm is not acquainted. Therefore, family firms give up some profitability to ensure that the organization remains under family control. All the reasoning above suggests that the international commitment level is bound to be lower among more riskaverse family firms. For example, risk aversion can prevail over the tendency toward growth when the latter needs external financing sources to be sustained (Penrose, 1959; Wall, 1998). Consequently, a negative correlation with progress within the internationalization process becomes evident when the firm shows a high level of risk aversion (Donckels & Aerts, 1994; Donckels & Frhlich, 1991; Gallo & Sveen, 1991; Morck & Yeung, 2003), which leads to the following hypothesis: Hypothesis 1: Risk aversion in family firms will reduce their likelihood of using entry modes that involve a high level of resource commitment.

Managerial Features
Stewardship theory posits that many leaders and executives aspire to higher goals at their jobsthey are not simply selfserving economic individuals but often altruistic persons acting for the benefit of the organization and its stakeholders (Davis, Schoorman, & Donaldson, 1997; Fox & Hamilton, 1994). These attitudes will be especially prevalent among family businesses in which leaders are either family members or individuals emotionally linked to the family (Miller & Le Breton-Miller, 2006). Furthermore, if a family firm wants to succeed, it must undertake new strategies in each generation: developing a new firm or division, becoming international, and helping successors to acquire skills that other family members still do not possess. Although business founders are generally authoritarian, conservative, and unable or unwilling to share power (Birley, 1986; Daily & Dollinger, 1991; Geeraerts, 1984; Levinson, 1971), descendants are usually eager to introduce strategic changes, achieve personal independence, and have a chance to prove their skills. Opportunities for value creation and

Reluctance to Change
According to Gallo and Luostarinen (1991), internationalization represents a process of change in many directions: changes toward new products, operations, and markets; changes in information, in planning and control systems, and in the organizational structure; and, finally, a modification of managerial attitudes. The degree of ownership and control can influence incentives, an owners monitoring costs and strategic behavior, and even the firms financial performance (Miller & Le Breton-Miller, 2006). Agency theory argues that concentration reduces monitoring costs because large-firm owners have the incentive and often the expertise to monitor their managers (Jensen & Meckling, 1976). The typical family firm tends to have a closed ownership, where the capital of the organization is in familys hands. It usually seeks stability and, according to Anderson and Paine (1975), characteristically commits itself to the existing power

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Claver et al. / Family Firms International Commitment 127

transformation often arise during the transition from one generation to the next, and this is beneficial to the succession process and its ultimate success (Barnes & Hershon, 1976; Sharma, Chrisman, & Chua, 1997). Moreover, family firms in second or successive generations are more likely to be present in international markets (Fernndez & Nieto, 2005; Gallo & Garca Pont, 1996); thus, we would expect the following: Hypothesis 2: The number of generations running a family firm will increase its likelihood of using entry modes that involve a high level of resource commitment. Another distinctive feature of family firmsoften thought to be one of their strengthsis long-term vision (Daily & Dollinger, 1993; Gersick, Davis, Hampton McCollom, & Lansberg, 1997; Harris, Martnez, & Ward, 1994; Tagiuri & Davis, 1992). This vision is the prevailing image regarding the familys involvement in the business in years to come, where prevailing means that the most influential members of the family share this vision (Ward & Aronoff, 1994). Long-term vision leads to development and differentiation and so promotes international success when it results from growth outside the local market (Gallo & Sveen, 1991; Okoroafo, 1999). This idea has to do with the postulates of international entrepreneurship, which emphasize the characteristics of the entrepreneur as a key element of the international strategy (Oviatt & McDougall, 2005; Zahra, Korri, & Yu, 2005). Long-term vision therefore appears as a driving factor behind the internationalization process (Dyer & Handler, 1994). Some family firms believe that it is impossible to separate the familys vision and goals from the strategy it follows. This approach results in a more unified long-term strategy and a stronger commitment to fulfill it (Habbershon & Williams, 1999). This vision can also help the family firm to overcome the drawbacks of the internationalization process and so allow it to make decisions involving a greater level of resource commitment; thus, we propose the following: Hypothesis 3: Long-term vision in family firms will increase the likelihood of their using entry modes that involve a high level of resource commitment. Another interesting issue has to do with family firm members attitudes toward internationalization strategies and knowledge of foreign markets. Obtaining this type of knowledge may prove difficult, though not so much if family members bring themselves to learn foreign languages

or travel abroad. In this case, the presence of a successor with proper training and an internationally oriented mentality may facilitate the internationalization process. Such family members can become an important locus of intangible resources (following the resource-based view of the firm; Barney, 1991; Peteraf, 1993) or ownership advantages (from the perspective of the eclectic paradigm; Dunning, 1981). Sending descendants to work abroad or having family members who live in other countries is bound to increase the international commitment of family firms (Gallo & Sveen, 1991; Reid, 1981). Family members are the ones who can best diagnose the opportunities and risks in a market unbeknownst to the organizations. For this reason, these family members may assume the responsibility for developing firm activities in the country where they are living (Gallo & Garca Pont, 1996), which leads us to the following hypothesis: Hypothesis 4: The presence of family members in other countries will increase the firms likelihood of using entry modes that involve a high level of resource commitment. The family firm must also ensure its survival through the professionalism of its managers. However, the knowledge and skills needed to succeed in the implementation of the internationalization process may not be present in the family, because, as Ward (1997) pointed out, the descendants motivation is not enough; they must also have a special set of skills. External managers can provide a number of resources that are valuable for the family firm in its efforts to forge ahead in an internationalization process. Previous experience in negotiations in different cultural contexts and knowledge about international markets are likely to become important intangible resources and ownership advantages for the firm, following the theoretical frameworks mentioned in the preceding hypothesis. Although a family firm can increase its professionalism by promoting family members to become managers, this is usually linked to the process of change that these firms must go through when they pass from the incorporation of one or two professionals giving advice on some areas to the presence of external executives managing the whole internationalization process. Internationalization can also help to overcome one of the main obstacles to the continuance of nonfamily managersnamely, the perception made by the latter of a limitation regarding their promotion chances inside the

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128 Family Business Review

company (Gallo, 1995); therefore, we propose the following hypothesis: Hypothesis 5: The presence of nonfamily managers will increase a firms likelihood of using entry modes that involve a high level of resource commitment.

self-financing, may have reduced their expansion chances (Mishra & McConaughy, 1999). As such, we propose the following: Hypothesis 6: Self-financing in family firms will reduce the likelihood of their using entry modes that involve a high level of resource commitment.

Family Firms Financial Structure

When a firm decides to go through an internationalization process, it must carry out an economic and financial analysis of its present and future situation. This can help it choose sources that will finance the investment planned. The peculiarities of family firms make it more difficult for them to be as economically rational as other enterprises. In fact, the financial decisions made by these firms often depend on personal features and circumstances of the ownermanager. The framework for the study of financial behavior shown by family firms is often associated with the pecking order theory (Myers, 1984; Myers & Majluf, 1984). This theory analyzes the financial structure, not in terms of ease or trouble to access financial sources, but according to an internal preference order established within the organization. The inclination of family firms to use internal financing sources limits their internationalization capabilities and so makes them incur significant opportunity costs. According to this theory, when the time comes to choose the sources that will finance business activity, self-financing always appears as the first option. The second option is the use of external funds, mainly provided by a financial institution. This includes funds provided by the government or any other institution, as aids or subsidies to the firm. The following option involves using external capital sources, thereby allowing investors to enter the firm (Chittenden, Hall, & Hutchinson, 1996; Gibson, 2002). This scheme has a lot to do with the owners refusal to incorporate into the firm any agents who can participate or intervene in its management. The owners wish here is to keep all the information about the organization under family control. In fact, this theory reflects the policy that some family firms follow because of their great risk aversion and their wish to maintain the control of the firm in the hands of the family (McConaughy et al., 2001; Mishra & McConaughy, 1999). The difficulty to access the capital market may also reduce business growth, in markets both national and international (Barry, 1975; Gallo & Vilaseca, 1996; Morck & Yeung, 2003). This highlights the fact that the financial policies traditionally implemented by these enterprises, with little indebtedness and an almost-exclusive dependence on

Method
Sample and Data Sources
We used a sample of Spanish family firms with international operations. The SABI database1 allowed us to obtain a population of 7,783 Spanish exporting firms. The figure later went down to 7,382 after removing those in situations that would probably make it difficult to obtain data about them (extinguished or inactive firms or those that had gone bankrupt, had suspended payments, or had been dissolved). Furthermore, because the results might vary depending on the industry and, above all, because of its importance in the internationalization process (Diamantopoulos & Inglis, 1988), the population was stratified using the first two digits of the International Standard Industrial Classification (Revision 3). A random sample of the population emerged as the best option. With a 2% error and an average response rate located around 5%, it seemed appropriate to select a sample of some 2,000 firms. The stratification of the sample through proportional affixation gave the following result: 60 firms from the primary extractive industry, 1,068 from the manufacturing industry, 60 from the construction industry, 606 from the trade sector, and 206 from the service sector. The instrument used to collect the data was a mail survey. At the end of the data collection period, 92 family firms returned complete questionnaires. Obtaining specific information about family firms is difficult (Daily & Dollinger, 1993; Upton & Heck, 1997). As such, it was necessary to identify these firms ex post factothat is, selecting from a large sample of enterprises those showing a number of characteristics typically associated with family-managed companies. As in the studies of Donckels and Aerts (1994), Westhead and Cowling (1998) and Chrisman, Chua, and Steier (2002), identification results from the review of the answers to various questions about ownership and management that appeared at the beginning of the questionnaire. We classified a company as a family firm if most of its ownership and

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Claver et al. / Family Firms International Commitment 129

management lies in the hands of a family (Chua, Chrisman, & Sharma, 2003; Donckels & Aerts, 1994; Gallo & Sveen, 1991; Graves & Thomas, 2004). Moreover, the information obtained after the survey helped to identify the entry modes used by each company. The questionnaire included a question in which the manager had to select the entry mode used in foreign markets, distinguishing between exports, contractual agreements, joint ventures, and wholly owned subsidiaries. Regarding nonresponse bias, no significant differences exist between the population and the sample in terms of industry or firm sizewith the latter being measured by number of employees and turnover.

Nonfamily managers. Following Ford (1988) and Dyer (1989), we used a dummy variable that takes the value of 0 if family members occupy the top management positions, as well as all the other positions of responsibility. If there are external managers, the variable takes the value of 1. Self-financing. We used two variables to assess selffinancing (Romano et al., 2001). A 5-point Likert-type scale served to show the importance of family funds in the financing of business growth. The second variable was that of profit reinvestment, which was measured using a 5-point Likert-type scale (the same as the previous).

Control Variables Dependent Variable

International commitment. International commitment was measured by four categories, the order of which indicated a growing degree of resource commitment: exports, contractual agreements, joint ventures, and wholly owned subsidiaries. This measure has been used in research on entry modes (Aulakh & Kotabe, 1997; Contractor & Kundu, 1998; Pan & Tse, 2000). Firm size. One of the most influential factors on entry mode choice is that of firm size. A larger dimension implies greater availability of financial and managerial resources, which in turn makes it easier to set up wholly owned subsidiaries (Tallman & Fladmoe-Lindquist, 2002). Previous research has supported that firm size is related to international commitment (Agarwal & Ramaswami, 1992; Campa & Guilln, 1999; Rialp, Axinn, & Thach, 2002; Stopford & Wells, 1972), which is why we included it as a control variable, using the number of employees as a measure (with a logarithmic transformation that would reduce a potential distortion in the results caused by outliers in the data). International experience. International experience has often appeared in the literature about internationalization, although no conclusive relationship with the entry mode has become clear. Some work has found that a firms experience can reduce its uncertainty about foreign markets and increase its proneness to use wholly owned subsidiaries (Erramilli, 1991; Gatignon & Anderson, 1988; Hyuk, 2000; Moon & Lee, 1990). Nevertheless, some companies do not need to accumulate a vast amount of experience to assume a stronger commitment in their internationalization processes. There are firms that, despite having operated for few years in foreign markets, prefer full-control entry modes, to avoid the costs linked to the negotiation with local agents (Anderson & Gatignon, 1986; Erramilli, 1991; Hill & Kim, 1988; Madhok, 1997; Zhao, Luo, & Suh, 2004). Moreover, some work has identified firms that have shown a high international proneness since their inception. These are the so-called international new ventures (McDougall, Shane, & Oviatt, 1994; Oviatt & McDougall, 1994) that question the sequential approach defended by the Uppsala model. Thus, with the aim of considering the dynamics of the internationalization process, we included international experience as a

Independent Variables
Risk aversion. Risk aversion shows the managerial perception regarding the importance assigned to the risk entailed by international activity, based on a 5-point Likerttype scale (Bauerschmidt, Sullivan, & Gillespie, 1985). Interviewees could choose from 1 (not important at all) to 5 (very important). Generation. For the generation variable, the manager had to select the option corresponding to the generation currently in charge of the firmfrom the first generation to the fourth or successive one (Gallo & Vilaseca, 1998; Okoroafo, 1999; Romano et al., 2001). Long-term vision. The variable of long-term vision reflects the managerial perception regarding the impact of such vision on the internationalization process (Gallo & Garca Pont, 1996). A 5-point Likert-type scale was used, from 1 (not important at all) to 5 (very important). Family members in other countries. In the case of family members in other countries, each manager had to assess how relevant such presence was in terms of the internationalization process, using a 5-point Likert-type scale (Gallo & Garca Pont, 1996).

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130 Family Business Review

Table 1 Variables and Measures

Hypothesis 1 2 3 4 5 6 Control Control Independent Variable Dependent Variable

Risk aversion: 5-point Likert scale International Generation: nominal variable commitment: Long-term vision: 5-point Likert scale Ordinal variable Family members abroad: 5-point Likert scale Non-family managers: dichotomous [0,1] 1 = exports Family funds: 5-point Likert scale 2 = contractual agreements Profit reinvestment: 5-point Likert scale 3 = joint ventures Firm size: number of employees (log) 4 = wholly-owned subsidiaries International experience: number of countries (log)

Note: Five-point Likert-type scale: 1 (not important at all) to 5 (very important).

control variable. It was proxied by the number of countries where the firm has started operations (Agarwal & Ramaswami, 1992; Diamantopoulos & Inglis, 1988; Kwon & Hu, 1995). The introduction of a logarithmic transformation of this variable avoids the influence of outliers. Table 1 provides a summary of the variables used in our empirical research.

Kutner (1985). This result clearly rules out the presence of multicollinearity. Table 3 shows the results of the ordered logistic regression used to test the hypotheses.

Discussion and Conclusions

Discussion of Hypotheses
Our model does not provide statistical support for the influence of risk aversion on the international commitment of family firms; therefore, Hypothesis 1 is not supported. This result could be due to the active involvement of second-generation members or external managers in the firms decisionsthese being two factors that can play an important role in the internationalization process because they help the organization to make progress in the successive stages of that process (Fernndez & Nieto, 2005). The presence of later generations or nonfamily members can therefore reduce the risk aversion traditionally shown by many of these enterprises. However, further research on this issue is necessary regarding, for instance, the source of reluctance to change. The second hypothesis proposed that later generations increase the likelihood of using entry modes that involve a high level of resource commitment. Nevertheless, the impact of successive generations has no statistical significance in our model; thus, Hypothesis 2 is not supported. Although the mere intention of incorporating later generations may strengthen attitudes of stewardship, the actual inclusion of later generations in a family business is a challenge fraught with negative aspects: Succession problems arise; a plethora of family members may drain

Results
As pointed out above, the dependent variable includes four categories that involve an increasing commitment: exports, contractual agreements, joint ventures, and wholly owned subsidiaries. Following Chu and Anderson (1992), an ordered logistic regression model is applicable to test the hypotheses, as has been done in previous research (Aulakh & Kotabe, 1997; Contractor & Kundu, 1998; Pan & Tse, 2000). This type of regression allows one to shape the dependency of a polytomic ordinal response (dependent variable) on a set of predictors (independent variables). The estimated coefficients reflect how changes in predictors affect the response. In our model, a positive sign indicates that the independent variable increases the likelihood of using entry modes that involve a higher level of commitment, whereas a negative sign implies just the opposite. Table 2 offers the correlation coefficients between the independent variables. The calculation of the variance inflation factor for all the independent variables permitted verification of the possible existence of multicollinearity. As can be seen, the highest variance inflation factor was 1.35, situated well below 10.0, the cutoff point recommended by Neter, Wasserman, and

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Claver et al. / Family Firms International Commitment 131

Table 2 Correlation Matrix and Multicollinearity Diagnosis

Variable 1. Risk aversion 2. Generation 3. Long-term vision 4. Family members abroad 5. Nonfamily managers 6. Family funds 7. Profit reinvestment 8. Firm size 9. International experience
Note: VIF = variance inflation factor. * p < .10. **p < .05. ***p < .01.

M 3.81 1.84 3.85 2.77 0.54 3.40 4.62 1.33 0.90

SD

VIF 1.23 1.35 1.13 1.15 1.30 1.10 1.19 1.27 1.33

1.13 0.79 .12 0.84 .14 .10 0.89 .17 .17 .08 0.50 .09 .16 .11 .11 1.12 .11 .01 .07 .03 .08 0.60 .03 .01 .19 .15 .01 .24** 0.53 .11 .21** .04 .15 .22** .16 .23** * * *** 0.47 .19 .19 .18 .07 .29 .12 .13 .14

Table 3 Ordered Logit Regression Model

Independent Variable H1: Risk aversion H2: Generation H3: Long-term vision H4: Family members abroad H5: Nonfamily managers H6: Family funds H6: Profit reinvestment Firm size (Control) International experience (Control) Intercept 1 Intercept 2 Intercept 3 2 2 log likelihood
Note: Standard errors appear in parentheses. * p < .10. **p < .05.

Parameter Estimates 0.233 (0.262) 0.228 (0.408) 0.769* (0.400) 0.208 (0.334) 1.393** (0.676) 0.538** (0.258) 0.218 (0.458) 0.672 (0.578) 0.105 (0.749) 4.531 (2.808) 4.698* (2.812) 5.444* (2.835) 19.749** 114.519

resources; and agency problems and political skirmishes become more likely (Miller & Le Breton-Miller, 2006). According to agency theory, the passing of generations may cause a greater disalignment of interests as ownership becomes scattered among different family members. Likewise, the arrival of new generations gives rise to one of the greatest concerns that these firms must face: the generational transfer process. Thus, the search for this family union and harmony in front of this problematic situation can prove to be a hindrance to the internationalization process. This situation, combined with the passing of time, increases the level of complexity (Gersick et al., 1997),

which leads to a perception of greater international opening as an excessively risky option owing to the divergence of interests among the family members involved. The third hypothesis presented long-term vision as a factor that can favor or encourage greater international commitment (Louter, Ouwerkerk, & Bakker, 1991). This variable becomes statistically significant and has a positive sign, which supports Hypothesis 3. This finding is in keeping with the idea expressed by many authors who describe longterm vision as one of the strengths of family firms (Daily & Dollinger, 1993; Fernndez & Nieto, 2006; Harris et al., 1994; Tagiuri & Davis, 1992). In the case of family firms, long-term vision emerges as a factor that favors international behavior, which is essential to make progress toward more advanced stages in the internationalization process. The fourth hypothesis stated that family members trained for international openings were positively associated with entry modes involving higher levels of commitment (Gallo & Garca Pont, 1996); however, this relationship did not turn out to be significant in our modelthus, Hypothesis 4 is not supported. The relative impact of this variable in the regression might be underestimated because of the positive effect of external managers. Nevertheless, knowing the impact caused by the stay of family members abroad would probably require an analysis of every entry carried out by the firm in individual countries. This examination could help to assess whether the family firm uses entry modes that involve a greater resource commitment in countries in which there are already family members able to provide a deeper knowledge about each market. Our results show that the presence of nonfamily managers is positively related to international commitment, thereby supporting Hypothesis 5. Risk aversion in family firms

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132 Family Business Review

could be mitigated by ensuring the presence of successive generations at the firms management or by hiring external managers (Dyer, 1989). As stated above, these external managers are likely to provide experience and knowledge that may become valuable, intangible resources and so help progress in the internationalization process. The last hypothesis is the one about the financial structure of family firms. Two variables served to show their preference for self-financing. The first variable refers to the importance assigned to family funds. The negative significant relationship obtained in the model tells us that the more that family firm managers assign relevance to family funds for international activity, the less internationally committed the organization isa result that coincides with those obtained in previous research (Romano et al., 2001). As such, this finding supports Hypothesis 6. Nevertheless, self-financing can also be associated with profit reinvestment. This measure, as used and applied in the ordered logistic regression, did not turn out to be significant. Many firms that use profit reinvestment may have utilized other financing resources, such as credits or loans given by financial institutions. Accordingly, this finding does not confirm the relationship that refers to profit reinvestment as a factor hindering stronger international commitment. In sum, Hypothesis 6 is only partially supported. Finally, it is worth highlighting that the two control variables included in the ordered logistic regression modelthe size of the family firm and its international experiencehave not influenced the results.

Conclusions and Contributions

The purpose of this research was to analyze the international involvement of Spanish family firms. As for findings, the first is that long-term vision is a key element of the international expansion of family firms. According to the postulates of international entrepreneurship, this factor is linked with the characteristics of the entrepreneur. In addition, this factor can definitely help the family firm to make progress in the successive stages of the internationalization process proposed by the Uppsala model. According to which, international expansion appears as a gradual process both in terms of knowledge and in terms of firm commitment. The second finding refers to the fact that the presence of external managers within the family firm may lead these companies to choose entry modes involving greater resource commitment. The valuable resources that nonfamily managers can provide, following the resource-based view

of the firm, can end up becoming ownership advantages for the family firm that, according to the eclectic paradigm, favor foreign direct investment. Finally, our findings show that the importance of family funds in the financing of business growth has a significant negative association with entry modes that require a higher commitment level, as defended by the pecking order theory. As we stated above, this theory analyzes the financial structure not in terms of the ease or trouble to access financial sources but according to an internal preference order established within the firm. Among the contributions made in this article, one stands out that seeks to fill an important void in the literature about family-owned firms, focusing on a key issue that can affect their survival: the internationalization process. Our article has tried to bridge this gap through a quantitative approach with several hypotheses, in the hope that they will help to reveal certain factors linked to the international commitment of family firms. The formulation of these hypotheses required the combination of various theoretical frameworks, some of them traditionally applied to family firm research (agency theory, stewardship theory or pecking order theory), some coming from strategic management (the resourcebased view of the firm), and finally, others as used in studies about internationalization (the eclectic paradigm and the Uppsala model). Based on the results obtained, it would be advisable to emphasize the role played by public administration in the international expansion of family firms and to focus on the issues highlighted by entrepreneurs. All of them favor the opening into external markets and so reduce the high mortality rate of these firms caused by such reasons as the widespread tendency to reject growth strategies and the reluctance to enter international markets. Public administration could adopt measures favoring the incorporation of external managers into family firms and could offer advice and training in internationalization to the new generations, with the aim of increasing the international commitment level of firms without any nonfamily managers.

Limitations and Future Research

Because of the small response rate, definitive conclusions cannot be drawn from this exploratory study. However, because the final sample obtained was representative of the population under study, it is possible to extrapolate the results to all other exporting family firms in Spain. Regardless, the degree of applicability of these findings to companies located in other countries will depend on the average size of the companies studied, as well as on the industries to which they belong.

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Finally, a possible limitation of this research would refer to the way of measuring family firms international commitment level, according to the choice of several foreign entry modes. Different results might have emerged using other approaches. To overcome this limitation, future research could consider, for instance, export intensity or the number of assets located in foreign countries, which would increase the chances to compare different approaches to this issue. In addition, among the main findings of this study stands out the greater influence of nonfamily managers, compared to that of family managers, on the likelihood of the firms deepening in its internationalization process. This finding paves the way for future research into the relative importance of both types of managers as far as international commitment is concerned. Likewise, this study could be extended using new variables, such as commercial and technological capabilities, and analyzing their influence on family firms.

Note
1. Sistema de Anlisis de Balances Ibricos (Iberian [Peninsula] Balance Analysis System).

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