Family Firms and the Choice Between Wholly Owned Subsidiaries and Joint Ventures

[We’re pleased to welcome authors Maria Cristina Sestu of the University of Pavia and Antonio Majocchi of the University of Pavia. They recently published an article in Entrepreneurship Theory and Practice entitled “Family Firms and the Choice Between Wholly Owned Subsidiaries and Joint Ventures: A Transaction Costs Perspective,” which is currently free to read for a limited time. Below, They briefly describe the motivation and impact of their research.

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What motivated you to pursue this research?

Recent entry mode research has largely ignored the ownership characteristics of the MNCs. We investigate the entry mode decisions of family and non-family firms and explore the role of family involvement on both the MNC side and the local partner side. We contend that the mixed results produced to date are a consequence of a lack of attention to family or non-family involvement on both sides in general and on the local firm side in particular. In the paper, we address why and how family involvement affects entry strategy.

Were there any specific external events—political, social, or economic—that influenced your decision to pursue this research?

Recent official data show that the value of cross border M&A and partial acquisitions deals in Italy reached a new high making the Italian companies the most targeted by foreign acquisitions in the EU along with France and just after the UK. A number of these acquisitions by family and non-family MNCs targeted iconic brands owned by family firms such as Loro Piana, Valentino, Pomellato and Krizia. Commenting the acquisitions on the news the managers involved on the deals often highlight the relevance of being a family firm. This suggests us that the family nature of both the target and the investing companies were still an underdeveloped issue in the management literature and convince us to further investigate the topic.

In what ways is your research innovative, and how do you think it will impact the field?

The intuition that studying the differences between the entry mode policies of family and non-family firms was a promising field of research proved right. We show that whether the investor and target are a family firm or not has an impact on the entry mode choice as family control is relevant on both sides of the transaction. We prove that future research in the field would be more fruitful if corporate governance characteristics were taken into account. We also show that family involvement generates some firm specific asset that affects family firm policies. In this way we contribute to the development of the theory of family firms.

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This entry was posted in Institutional Theory, Management, Management Theory and tagged , , , , by Cynthia Nalevanko, Senior Editor, SAGE Publishing. Bookmark the permalink.

About Cynthia Nalevanko, Senior Editor, SAGE Publishing

Founded in 1965, SAGE is the world’s leading independent academic and professional publisher. Known for our commitment to quality and innovation, SAGE has helped inform and educate a global community of scholars, practitioners, researchers, and students across a broad range of subject areas. With over 1500 employees globally from principal offices in Los Angeles, London, New Delhi, Singapore, Washington DC, and Melburne, our publishing program includes more than 1000 journals and over 900 books, reference works and databases a year in business, humanities, social sciences, science, technology and medicine. Believing passionately that engaged scholarship lies at the heart of any healthy society and that education is intrinsically valuable, SAGE aims to be the world’s leading independent academic and professional publisher. This means playing a creative role in society by disseminating teaching and research on a global scale, the cornerstones of which are good, long-term relationships, a focus on our markets, and an ability to combine quality and innovation. Leading authors, editors and societies should feel that SAGE is their natural home: we believe in meeting the range of their needs, and in publishing the best of their work. We are a growing company, and our financial success comes from thinking creatively about our markets and actively responding to the needs of our customers.

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