Factors Influencing Internationalization and Entrepreneurial Growth of Family-Owned Businesses - Research Paper Example

firms; Generational Involvement is associated with the level of Entrepreneurial indication in family firms; and, Entrepreneurial Orientation is positively related to the internationalization of family firms. Internationalization is the “process by which firms both increase their awareness of the direct and indirect influence of international transactions on their future, and establish and conduct transactions with firms in other countries” (Koh, 2010, p.22). As 80% of businesses in US are family owned, it is responsible for 60% of employment.

Although a lot of these firms are small in size, still they represent around one-third of Fortune 500 Companies and around thirty five percent of the S&P 500 Industrials. (Blodgett et al, 2012) In most companies around the globe, internationalization is an important challenge which they need to address to make sure they remain competitive in today’s Global Economy. An entry into foreign soil is marked with uncertainty which may require breaking away from traditional and long used manufacturing processes, acquiring new channel partners and exploring avenues for funding.

However, internationalization can be more even more challenging in family owned businesses, because the entry into foreign markets may require structural changes within the organization and most of these firms are extremely unwilling to lose family control. (Casillas et al, 2013). While family businesses aim for expansion, with exploring new markets, they are faced with the opposite force which is stability in their home market, which is relatively low-risk. (Casillas et al, 2013). Studies that have researched into the want of internationalization of family firms reveal an inclination toward family firms wanting to operate in the traditional markets and seem reluctant to venture into foreign territory.

(Koh, 2010). This is not to say that NO family firms have surmounted this challenge, quite a few family firms have ventured into international markets and