Foreign Market Exit in Family Firms: Do Historical Military and Cultural Frictions Matter?

Journal of World Business, Forthcoming

48 Pages Posted: 17 Nov 2023

See all articles by Sihong Wu

Sihong Wu

University of Auckland Business School

Francesco Chirico

Jonkoping University - Jonkoping International Business School (JIBS); Macquarie University, Macquarie Business School

Di Fan

RMIT University - College of Business and Law

Jiayan Ding

Tongji University

Yiyi Su

Tongji University

Multiple version iconThere are 2 versions of this paper

Date Written: October 20, 2023

Abstract

In a fast-changing world, strategic decisions to exit a foreign market become more complex for family firms, owing to their vulnerability to uncertainty in internationalization. However, there is scant research on family firms’ foreign market exit with respect to their responses to contextual influences from home and host countries. This study reconciles the socioemotional wealth (SEW) perspective and the friction lens to address this gap. Using a sample of 1,455 subsidiaries established by 413 Chinese family firms in 2009-2018, we find that historical military friction increases family firms’ foreign market exit, while cultural friction leads to a lower exit propensity. We also find that family management reinforces the friction-exit relationships, and this effect is strengthened when the family firm is controlled by the first generation. Our theory and related findings deepen our understanding of the foreign market exit decision of family firms while offering important theoretical and managerial implications.

Suggested Citation

Wu, Sihong and Chirico, Francesco and Chirico, Francesco and Fan, Di and Ding, Jiayan and Su, Yiyi, Foreign Market Exit in Family Firms: Do Historical Military and Cultural Frictions Matter? (October 20, 2023). Journal of World Business, Forthcoming, Available at SSRN: https://ssrn.com/abstract=4607752 or http://dx.doi.org/10.2139/ssrn.4607752

Sihong Wu

University of Auckland Business School ( email )

12 Grafton Rd
Private Bag 92019
Auckland, 1010
New Zealand

Francesco Chirico (Contact Author)

Jonkoping University - Jonkoping International Business School (JIBS) ( email )

Jönköping, 55111
Sweden

Macquarie University, Macquarie Business School ( email )

New South Wales 2109
Australia

Di Fan

RMIT University - College of Business and Law ( email )

GPO Box 2476V
Melbourne 3001, Victoria
Australia

Jiayan Ding

Tongji University ( email )

Yiyi Su

Tongji University ( email )

1239 Siping Road
Shanghai, 200092
China

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
24
Abstract Views
215
PlumX Metrics