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Family Ownership, Institutional Ownership, and Internationalization of SMEs

Authors

  • Hsiang-Lan Chen,

    Corresponding author
    • Address correspondence to: Hsiang-Lan Chen, Department of Finance, National Kaohsiung First University of Science and Technology, No. 2, Jhuoyue Road, Nanzih District, Kaohsiung City 811, Taiwan. E-mail: angelachen@ccms.nkfust.edu.tw.

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    • Hsiang-Lan Chen is associate professor in Department of Finance at National Kaohsiung First University of Science and Technology.
  • Wen-Tsung Hsu,

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    • Wen-Tsung Hsu is associate professor in Department of International Business at Ming Chuan University.
  • Chiao-Yi Chang

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    • Chiao-Yi Chang is associate professor in Department of Insurance and Finance at National Taichung University of Science and Technology.

  • The authors thank associate editor Hermann Frank and the anonymous reviewers for their valuable suggestions. This research was supported by the National Science Council of the Republic of China under Grant NSC 97-2410-H-327-004.

Abstract

Family ownership has been recognized as an important determinant of corporate strategic choices; however, little research investigates the effects of family ownership and corporate governance on internationalization in small and medium-sized enterprises (SMEs). This paper utilizes agency theory and the resource-based view to analyze the relationships between family ownership, institutional ownership, and internationalization. Using a sample of Taiwanese SMEs, the finding of a positive family ownership–internationalization relationship suggests that family ownership may encourage internationalization. The interaction of family ownership and institutional ownership is positively related to internationalization, suggesting that SMEs with high family ownership are more likely to internationalize as institutional ownership increases.

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