Leadership decisions in foreign subsidiaries of multinational family business groups

Abstract

Employing institutional theory and agency theory, this study examines the impact of home and host country’s cultural and economic differences on the likelihood of utilizing family management in foreign subsidiaries of multinational family business groups. The results indicate that the larger the cultural differences between home and host country, the more likely it is that a family member will be assigned to lead a foreign subsidiary. A higher ownership stake in the foreign subsidiary strengthens that positive relationship. Economic differences, however, show a direct negative association with the likelihood of utilizing family management.