Internationalisation of traditional, small and medium-sized family businesses : an absorptive capacity approach

Abstract

This thesis investigates the internationalisation of Maltese small and medium-sized family businesses (SMFBs) engaged in more traditional economic activity. Despite family businesses dominating enterprise populations worldwide, and increasing policy awareness acknowledging their leading role in socio-economic development, research into the internationalisation of family businesses remains extremely limited. Addressing this gap, this study examines the internationalisation of these under-researched firms, investigating how their unique characteristics and circumstances impact and effect on internationalisation dynamics and processes. The overarching exploratory research question driving the central thrust of this study is: ‘What is the nature and extent of internationalisation among SMFBs in this context?’ In increasingly competitive globalised markets, understanding such dynamics is important at firm and national levels. Subsequently, given the established fundamental role of knowledge in internationalisation, this study seeks further understanding asking: ‘How do such SMFBs approach knowledge requirements associated with internationalisation, as proposed by the absorptive capacity (ACAP) approach?’ In adopting an ACAP approach, this research explores and examines how information and knowledge associated with internationalisation is acquired, assimilated and exploited. Given that hardly any research exists at the domain intersects which this thesis addresses, it synthesises and draws together research from the distinct fields of small firm internationalisation, family business, and emerging ACAP research. Seeking context-rich meanings, a qualitative, case-based approach involving eight SMFBs was adopted. Focus converged onto specific internationalisation events. First, in-depth analysis of the SMFBs’ outward internationalisation processes from first steps was undertaken – tracing SMFBs’ evolution, development and international activity over time. Secondly, adopting an ACAP approach and building on acquired insights guiding further investigation, an analytic framework was developed integrating internationalisation events with associated ACAP dynamics. The SMFBs’ internationalisation was found to be mainly influenced by the entrepreneur system, managers’ characteristics and volition, idiosyncratic circumstances and environmental dynamics. Contrasting with internationalisation process theories (IPT) traditionally attributed to this context, SMFBs were also observed internationalising from inception, or rapidly as ‘born again internationals’ at a mature stage. Despite size-related resource limitations, in instances owner-MDs creatively engaged in more committing modes and FDI – leapfrogging internationalisation stages. Such behaviour not being sufficiently explained or accommodated by IPT or INV perspectives, this thesis underlined importance in adopting more holistic approaches, integrating social and relational as well as resource perspectives in investigating complex phenomena associated with internationalisation. Novel in adopting an ACAP approach in this context, key findings converged on the crucial centrality of the founder / owner-MD and the vital role of social contacts and relationships in determining SMFB internationalisation and associated ACAP. A main contribution of this research inheres in its empirically derived insights and the development of a conceptual approach on these tacit core elements organically determining internationalisation, associated ACAP dynamics and capability in traditionally-oriented SMFBs. This departs from existing operationalisations which emphasise formal and structured knowledge processes within knowledge-intensive corporate environments – incompatible with this research’s context, notwithstanding ACAP’s universal relevance. Findings highlight the importance of delicately balancing management and family dynamics, a double-edged prime source of competitive advantage (or disadvantage) directly influencing both ACAP and internationalisation capability. This thesis concludes with a discussion of the implications for theory, management and policy.