Emerging Market Multinational Family Business Groups and the Use of Family Managers in Foreign Subsidiaries

Abstract

Little is known about the internationalization behavior of Emerging Market Family Business Groups (EFBGs) and their strategic usage of family managers in foreign subsidiaries facing uncertainty due to institutional differences. Informed by the resource-based view of the firm and by institutional theory, we hypothesize that family managers are an EFBGs-specific resource used to mitigate institutional uncertainty caused by larger institutional distances occurring between home and host countries. Moreover, family managers are used differently depending on the regional focus of the EFBGs, which further strengthens the critical role that family manager’s play in management and control across the business groups. We employ 5-year panel data on Taiwanese EFBGs, and our results indicate that family managers tend to be assigned by EFBGs with stronger operations outside the home region, and in foreign subsidiaries where strong differences in regulative and cognitive institution may exist. We contribute to the continuing understanding of family ownership in the management of EFBGs, and the research of internationalization of firms on managing foreign subsidiaries.

Keywords Emerging market family business groups, Family managers, Family business ownership, Institutional distance