Internationalization of family-controlled SMEs from the process, network and socioemotional wealth perspectives

Author: Jaakko Metsola Title: Internationalization of family-controlled SMEs from the process, network and socioemotional wealth perspectives Subject: Entrepreneurship Type of degree: Master’s Thesis Time of publication: 2016 Number of pages: 88 Family business (FB) internationalization has received scant attention in the field of international business research. This qualitative multiple-case study tackles the gap and, moreover, approaches the theme from relatively ignored perspectives in the field of FB internationalization itself: process, network, and socioemotional wealth (SEW). This study provides answers to how familycontrolled SMEs build their international networks, what characterizes the foreign network relationships, and to what extent the SEW of the firms explains the way of internationalizing. To provide reflection points for these research goals, rigorous literature review was made focusing especially on justifying the distinctiveness of FBs, explaining SEW, presenting the network view, and scanning the current state of FB internationalization studies and their contribution. In order to effectively analyze the role of SEW, referring to the noneconomic aspects derived from the FB, family-controlled firms having high ownership and involvement in the business were chosen in the study. Total 10 case FBs from Finland were interviewed and the data was analyzed through content analysis method. In addition to transcriptions, detailed narratives of the interviews, firm descriptions, and SEW descriptions were made to enable good understanding of the international networking processes and FB-related characteristics. The results of the study have several implications. First, the internationalization process of family-controlled SMEs follows a pathway that can be situated between the traditional Uppsala model and INV-based model, as they start from nearby markets but continuously scan opportunities in farther locations to speed up the extent of internationalization. Second, these firms are dependent on building relationships with foreign partners that can fill the limited resources and capabilities of the firms. An optimal partner has existing networks and channels in the market, is trustworthy, experienced and knowledgeable, and is similar in terms of size, product portfolio and identity. Family-controlled SMEs seek to create strong, long-term and trustworthy ties to foreign partners from early on, and to strengthen the fertility of the relationships, many family-controlled SMEs create partnerships with other FBs in the foreign markets. The results of this study also suggest that active approach to going international reflects to activity in managing and developing the established network relationships. From the SEW perspective, high SEW can act as activating asset for family-controlled SMEs in their internationalization processes and not as a preventing factor; SEW can be both the means and the end for the internationalization of family-controlled SMEs. In managing and developing foreign network relationships, pursuing SEW can be like a glue that creates strong, reciprocal relationships between family-controlled SMEs and foreign, especially FB partners.