Organizational‐Social‐Capital, Time and International Family SMEs: An Empirical Study from the East of England

• Published date: 01 September 2019
• Author: Zografia Bika,Christos Kalantaridis
• Date: 01 September 2019
• DOI: http://doi.org/10.1111/emre.12160

Organizational-Social-Capital, Time and

International Family SMEs: An Empirical

Study from the East of England

ZOGRAFIA BIKA

1

and CHRISTOS KALANTARIDIS

2

1

Norwich Business School, Universityof East Anglia (UEA), Norwich, United Kingdom

2

Faculty of Business & Law, De Montfort University, Leicester, United Kingdom

Previousstudies on family-SMEinternationalizationhave largely focused onwhat resources areneeded to drive an

incrementalprocess rather than how resource managementoccurs in historical time. Thispaper focuses on the latter,

adopting a socialcapital perspective (capturingboth internal, i.e. among family-SME board members, and external,

crossborder agent dyads, relations) in orderto decipher casestudy data from the Eastof England. Findings showthat

it is not the presence or absence oforganizational-social-capital that affectsfamily-SME internationalization success

but ratherits variable use over the yearsdriven by the future pursuitof longevity,not growth. Key within thiscontext is

the variable useof the international expertise and management capabilityof non-family managers in the familySME

intra-organizational context.Ultimately this may lead to changeand learning that occurs erratically, oftenincluding

reversals, without causing family-SME progression across a sequence of incremental stages.

Keywords: family business; internationalization; social capital; history; SME

Introduction

The growing integration of firms of all sizes, and

particularly SMEs (small and medium-sized enterprises)

in international and global networks of production and

distribution is now widely acknowledged as important

for long-term growth. This underpinned the emergence

of a growing number of studies examining the

internationalization of the SME (Zahra et al., 2009; Jones

et al., 2011). This body of knowledge builds on the

conceptual premise that ‘size matters’. The impact of

smallnessis invariably viewed in terms of resource-related

constraints, as well as the over-arching influence of the

entrepreneurial personality (Kalantaridis, 2004). Within

this context, the literature focuses heavily on a handful

of key research questions: which national markets should

an SME enter, how(mode of entry), and when (in relation

to the stage in the development of the firm), as well as the

impact of internationalizationon business performance. A

dynamic perspective (introducing sequential time) and

resource availability are central planks of the emerging

body of knowledge in SME internationalization, and cut

across diverse theoretical constructs.

More recently, and within this intellectual context, a

new stream of research has emerged: focusing on the

internationalization of family SMEs (Fernández and

Nieto, 2005; Arregle et al., 2012). The distinctiveness of

this (process), in comparison to SME internationalization

more widely, is underpinned by the defining attributes of

family businesses (Fernández and Nieto, 2005, 2006;

Kontinenand Ojala, 2010) (providing therationale for this

paper) and reflects the numerical significance of family

SMEs. The importance of family SMEsis unquestionable,

provided that they represent up to 85% of all the firms in

the EU and USA (Kontinen and Ojala, 2012).

Existing research on family SMEs identifies three

reasons why the internationalization process in this

empiricalcontext may differ from that of SMEs in general.

First, the emphasis placed by members of the owning

family upon the survival of the firm in the long-term,

rather than profits realised in the short to medium-term,

influences the propensity to take risks, often associated

with internationalization (Zahra, 2003; Fernández and

Nieto, 2005). Second, internationalization success is

viewed as inherently conflictual (between owners and

specialist managers) and is attainable only when balance

is achieved between two desirable but incompatible

Correspondence: Zografia Bika, University of East Anglia (UEA),

Norwich Business School, Thomas Paine Study Centre, Norwich, NR4

7TJ, UnitedKingdom. E-mail z.bika@uea.ac.uk

DOI: 10.1111/emre.12160

©2017 European Academy of Management

European Management Review, Vol. 16, 525–541, (2019)

managerial features (stewardship and ambassadorship) or

in other words an organizational bargain (Arregle et al.,

2012; Sciascia et al., 2013; Pukall and Calabrò, 2014).

Lastly, the strong internal ties of family SMEs are likely

to influence adversely their ability to form networks with

other businesses (Graves and Thomas, 2008; Kontinen

and Ojala, 2011a, 2011b). This, in turn may restrict their

ability to tap into sources of information needed in order

to identify and exploit international opportunities. The

emerging body of literature has focused squarely on

export sales (Zahra, 2003; Fernández and Nieto, 2005;

Kotey, 2005; Sciascia et al., 2013) or people’sstrategic

aspirations (Gallo and Garcia-Pont, 1996; Yu, 2001;

Graves and Thomas, 2008; Kontinen and Ojala, 2011a)

rather than on resource management over time (Pukall

and Calabrò, 2014). This led Kontinen and Ojala (2010:

106) to argue that ‘there is limited knowledge on the

processes and strategies that make family businesses

unique in their internationalization’.

In response, we set out to decipher: how

internationalization processes, focusing particularly on

resource management, are shaped by the defining

attributes of family businesses? That is, the pursuit of

longevity, conflicting interests between owners and

specialist managers, and an internal ties emphasis. This

is fundamentally a study of the imprint of the distinct

family business organizational form on SME

internationalization. In doing so, we explore not only

‘becoming’international but also remaining and even

retreating from internationalization, thus adopting a focus

that extends to post-entry outcomes (Reuber, 2016). In

order to achieve our research objectives, we introduce

two conceptual advances in the family SME

internationalization literature.

First, we adopt a social capital perspective that is

increasingly influential in family business research

(Arregle et al., 2007; Pearson et al., 2008; Carr et al.,

2011). Payne et al.’s (2011: 491) definition of social

capital as ‘the resourc es derived from social relations hips’

is adopted here,thus following an approach thatembraces

its theoretical ‘potential as a multilevel lens’. However,

unlike previous family business research (Pearson et al.,

2008; Carr et al., 2011), we avoid limiting our gaze to

interaction within the family organization (Adler and

Kwon, 2002) or Quadrant 2 in Payne et al.’s typology,

but also includewhat is happening outside the boundaries

of the firm. Such an approach assists our efforts to

reconsider the value-adding potential of non-family

managers,in the case of our paper often involved in export

activity, whose exclusion from past research was

lamented by Sanchez-Famoso et al. (2015): thus, adding

another level of analysis to social capital and examining

it qualitatively in the family SME context. This also

provides a useful link with the concept of negative social

capital: that is empirically unpicked when it remains

internally (i.e., among SME family board members)

focused.

Moreover, this perspective facilitates the advancement

of a conceptual distinction between sequential time, with

an inherently incrementalist logic, that dominates the

existing body of literature on SME internationalization,

and historical time: the second conceptual advance of

the paper. In contrast to the existing literature where

emphasis is placed on learning that underpins a move

from one stage to another (sequential time), we believe

that the enduring involvement of the family, and the

emphasis that it places on SME longevity, serves as

a unique historical condition that influences

internationalization (Pearson et al., 2008). In this context,

historical time, in what may be an intermittent and not

incremental (but undoubtedly accumulative) process,

emerges as a key consideration.

The paper is organised asfollows: the relevant body of

literature and the key concepts used in our paper are

presented in the next Section. Then we proceed to discuss

the study’s research methods used to collect and d ecipher

the primary data. Empirical material is presented in the

fourth Section of our paper, followed by discussion.

Finally, conclusions of the main findings are drawn

with respect to the genesis of such organizational-

social-capital.

Literature review

SME internationalization

The effects of smallness (captured invariably in terms of

employment) led tothe emergence of a broad and diverse

body of literature on SME internationalization. While

reviewing this body of work goes well beyond the

confines of our paper, a brief overview of

internationalization dynamics and resource availability,

that influenced family SME internationalization research,

constitutes the point of departure of discussions around

time considerations (and the divide between sequential

and historical) and social capital.

In large chunks of the literature, SME

internationalization is viewed as a sequence of stages

defined by (organizational) experimental learning that

increases (market) knowledge and leads the SME to

increased (market) commitment (Ruzzier et al., 2006). In

the Uppsala model this is manifested in terms of the

SME either entering new, less distant (not only

geographically bu t also psychologically/cultural ly)

markets or adopting different modes of entry with

increasing levels of international commitment (Johanson

and Vahlne, 1977). This is the case even when ‘distance’

has been revised in this model by putting network

specificity and the liability of outsidership in the place of

Z. Bika and C. Kalantaridis

©2017 European Academy of Management

526