Internationalization of family businesses: a theoretical model based on international entrepreneurship perspective

5/ LEADERSHIP AMBIGUITY AND AMBIVALENCE: A CRITICAL SOLUTION B.R. Brocato, Stuart S. Gold 16/ INTERNATIONALIZATION OF FAMILY BUSINESSES: A THEORETICAL MODEL BASED ON INTERNATIONAL ENTREPRENEURSHIP PERSPECTIVE José C. Casillas, Ana M. Moreno, Francisco J. 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Vol. 2, No. 2/2010 ISSN 2080-2951 Internationalization of Family Businesses: A Theoretical Model Based on International Entrepreneurship Perspective JOSÉ C. CASILLAS ANA M. MORENO FRANCISCO J. ACEDO Departamento de Administración de Empresas and Marketing University of Seville Abstract: Family Businesses account for a high percentage of fi rms in today’s economy. One of the main problems fi rms have to face is the rise in the number and diversity of competitors. In this paper, we propose a global model designed to provide an understanding of the international entrepreneurship of family businesses, departing from an analysis of the theoretical contributions of two separate trends: International Entrepreneurship and the study of family businesses. This model is contrasted by the study of six cases of multinational family businesses throughout their lifetime. Two main elements stand out as determinants of international entrepreneurship for this type of fi rm: knowledge and family commitment. In addition to these two factors, the model includes other internal and external contingent variables. Key-Words: Family-own businesses, internationalization, Family Multinationals. 1 INTRODUCTION For the majority of companies, internationalization is one of the main challenges that they must address to secure their survival in an increasingly global and complex environment. But in the case of family businesses, this is doubly challenging. As for any company, entry into foreign markets means breaking into uncertain environments and requires structural changes within the fi rm – changes in manufacturing processes, new distribution channels, accessing new sources of funding, etc. In addition to this, these fi rms do not wish to lose family control of the business and are reluctant to adopt any decision that might reduce that family control. In short, family businesses face two opposing forces: the fi rst drives them to grow and expand beyond their traditional markets, whilst the second encourages stability and the development of low-risk projects within the traditional product market. The few studies that have looked at internationalization and family business seem to indicate the predominance of the second force over the fi rst, so that family businesses appear to be less inclined to expand their international activities (Okoroafo, 1999; Fernández and Nieto, 2005). However, many family businesses have overcome the challenge with enormous success, becoming family-run multinational companies (FMNCs). These businesses are famous examples of how to combine the desire for international expansion and family control. Some research questions can be posed regarding these particular characteristics: what was the process of internationalisation within these fi rms and to what extent can existing theoretical models explain the internationalisation process of these fi rms? In this paper, we will attempt to partially answer these questions and propose a general model designed to provide an understanding of the international entrepreneurship of family businesses. In order to depict our model, we have analysed the theoretical contributions of two separate trends: JOSÉ C. CASILLAS, ANA M. MORENO, FRANCISCO J. ACEDO / 19 international entrepreneurship as conceptualized by McDougall and Oviatt (2000), on the one hand, and the study of the internationalization of family businesses on the other. Next, we have analysed six cases of multinational family businesses throughout their lifetime in order to illustrate the proposed model. The longitudinal study of these companies is particularly appropriate in nascent fi elds seeking to develop new theoretical models (Eisenhardt, 1989). This is the case for the study of family businesses in general and particularly in relation to multinational family businesses, where very few theoretical models exist. By conducting a review of the literature covering the fi elds of international entrepreneurship and the internationalization of family business, together with the six longitudinal case studies, we established a set of propositions and a model to explain the international entrepreneurship of family businesses. This model highlights the importance of combining two essential factors: the specifi c knowledge required for internationalisation (know-how) and the family’s commitment to internationalisation (desire). The aim of our proposed model is to provide a means for a better understanding of the phenomenon for researchers who are interested in international business and family businesses, and to improve the practice of managerial teams and owners of family businesses interested in foreign expansion. 2 REVIEW OF THE LITERATURE 2.1 Internationalisation and family business Interest in the internationalisation of family business is undoubtedly growing. This can be seen in the increasing number of research papers published in recent years (Casillas, Acedo and Moreno, 2007). The following is a summary of how the internationalisation of family business has evolved. Gallo and Sveen’s preliminary article (1991) can be considered to be the fi rst research into the internationalisation of family business. They assume that internationalisation is a positive phenomenon for family fi rms, which can be driven or restrained by various factors – the fi rm’s strategy and objectives, its structure and organisational systems, the business culture, the evolutionary stage of the fi rm and the family’s international orientation. Five years later, Gallo and García-Pont (1996) included a new determining factor in the international entrepreneurship of family businesses: management attitudes. Okoroafo (1999) investigates a sample of 187 family businesses from Ohio (USA). His study shows that the majority of family businesses do not pursue international activities and suggests that those fi rms that do not begin the internationalisation process in the fi rst or second generation fi nd it hard to do so later on. Davis and Harveston (2000) add new variables, such as the founder’s age and education level and the role of technology in the international entrepreneurship of the family fi rm. Tsang (2001) analyses several aspects relating to internationalisation of family businesses from a knowledge and learning-based perspective. According to Tsang, internationalisation for a family business is a process of increasing and iterative learning and experience is an essential variable in this process. Recent studies have linked the ownership structure with decisions regarding international expansion (Zahra, 2003; George, Wiklund and Zahra, 2005, actualizar con el de 2007). Zahra (2003) suggests that the infl uence of the ownership structure and the level of family involvement in the internationalisation process can be linked to the level of motivation for improving the company’s results in the long term. George, Wiklund and Zahra (2005) propose that the ownership structure infl uences the propensity for risk and therefore the extent and scale of internationalisation. This latter relationship, ownership structure and perceived risk, has also been defended by Casillas and Acedo (2005), who devised a model that analytically correlates the extent of family involvement with the fi rm’s level of internationalisation, together with a series of external and internal factors – the perceived level of risk, use of agencies or public institutions, the demographic characteristics of the director general, the age of the fi rm, etc. Their empirical study demonstrates that the degree of family involvement in the fi rm indirectly infl uences the level of internationalisation, that is, through the size of the fi rm and the perceived risks of increasing its international activities (Casillas and Acedo, 2005). Other studies have analysed the role of the specifi c resources and capabilities of family businesses in their decisions regarding internationalisation. Fernández and Nieto (2005) link the availability of inactive resources, the degree of family participation in the ownership of the fi rm, generational changes, and relationships with other fi rms to the degree of the fi rm’s internationalisation. On the other hand, Menéndez (2005) suggests that family fi rms do not feel that a lack of resources and capabilities limits their decisions about internationalisation. She also notes a greater degree of international orientation in second-generation fi rms, compared to those still run by the founding generation (Menéndez, 2005). Finally, Graves and Thomas (2006) demonstrate that family businesses have smaller management teams than non-family fi rms during the internationalisation 20 / GLOBAL MANAGEMENT JOURNAL process, probably because they tend to include fewer managers from outside the family. Likewise, the level of professionalisation is lower than in non-family fi rms. Finally, family businesses are reluctant to seek outside advice (from consultants, public agencies and institutions, business associations etc). Table 1 is a summary of the main aspects of the existing literature on the internationalisation of family businesses, with a summary of the principal variables we have considered. To summarise, the literature on the international dimension of family business shows several relevant characteristics. Firstly, it highlights how few studies have been conducted over the last 20 years. However, interest in this topic is growing, as seen by the dates of the research papers published since the initial work of Gallo and Sveen (1991). Secondly, there is a considerable degree of conceptual fragmentation in the few papers that do exist. The theoretical assumptions differ greatly in each study, as seen in the variety of conceptual frameworks used – family business; international entrepreneurship; agency theory; resource-based view of the fi rm; etc. In view of this situation, more work is needed to construct more robust theoretical frameworks. We therefore consider it advisable to fi rmly estab- Table 1: Independent variables in the internationalisation of the family fi rm Independent variable Authors Supra-fi rm level Membership of networks Fernández and Nieto; Casillas & Acedo (2005) Firm level Firm’s strategy and objectives Gallo & Sveen (1991) Organisational structures and systems Gallo & Sveen (1991) Culture Gallo & Sveen (1991); Tsang (2001) Stage of life-cycle Gallo & Sveen (1991) Technology Davis & Harveston (2000) Resources and capabilities Fernández & Nieto (2005); Menéndez (2005) Ownership Ownership structure Zahra (2003); George, Wiklund & Zahra (2005); Casillas & Acedo (2005) Management Professionalisation Graves & Thomas (2004); Gallo & García-Pont (1996) Top-Management motivation Graves & Thomas (2004) International experience Tsang (2001) Family International orientation Gallo & Sveen (1991); Menéndez (2005) Family commitment Zahra (2003); Fernández & Nieto (2005); Casillas & Acedo (2005) Culture Gallo & Sveen (2001) Founder Leadership Davis and Harveston (2000) JOSÉ C. CASILLAS, ANA M. MORENO, FRANCISCO J. ACEDO / 21 lish research into the internationalisation of family business by placing it in a better theoretical framework and in a more general fi eld of application. Recent developments in the study of international entrepreneurship can therefore prove to be very useful (Oviatt and McDougall, 1994; Zahra and George, 2002). 2.1 International Entrepreneurship and family business Internationalization behavior may be described as entrepreneurial (McDougall and Oviatt, 2000), in that it is innovative, proactive and risk-seeking (Covin and Slevin, 1991), and is characterized by the speed and scope of the fi rm’s international endeavors from the outset (Madsen and Servais, 1997; Knight and Cavusgil, 1996). Entrepreneurial behavior and the speed of internationalization are generally considered to be the defi ning characteristics of born-global fi rms. Even so, many family fi rms cannot be seen under the traditional umbrella of the international entrepreneurship approach, focused mainly on their age at entry, as they present different episodes in which they behave as born-global fi rms. McDougall and Oviatt (2000) proposed a wider concept for the international entrepreneurship fi eld as a combination of innovative, proactive, and risk-seeking behavior that crosses national borders and is intended to create value in organizations, leaving aside traditional aspects as fi rm size and age as defi ning characteristics for the conceptualization of the phenomenon. Bell et al. (2001) stated that “there is also evidence in the literature that fi rm internationalisation may be precipitated by particular ‘episodes’ that can lead to rapid international expansion or deinternationalisation”. Family fi rms are characterised by the succession phenomenon, with the difference that this can be managed from a rational perspective. These authors observe that particular ‘episodes’ can lead to an ‘era’ of rapid and dedicated internationalisation, in which the role played by the top management is fundamental for its international orientation, commitment and experience, and changes in ownership or management are often the catalyst for a shift in strategic direction leading to internationalisation. It is this specifi c attribute which makes the use of the international entrepreneurship approach preferable to internationalisation process models when attempting to explain the internationalization of family businesses. Critics of the process approach point out that we cannot observe business internationalization as an established pattern (Andersen, 1993). Nevertheless, the process approach still remains useful in explaining the crucial role played by knowledge in the internationalization process. There is a scarcity of literature that attempts to propose models that aid our understanding of the INV phenomenon. Those models that do exist place the origin of the phenomenon in factor relating to environment and industry, while also highlighting the importance of the senior management. Oviatt, Shrader & McDougal (2004) suggest that the top management team is responsible for interpreting the current status of the industry and adjusting the fi rm to it in line with tthe company’s specifi c characteristics in order to achieve an international behavior pattern that provides greater performance or a competitive edge. For their part, Zahra & George (2002) see the individual as the origin of the process, so that strategic and environmental factors are mere moderators in our explanation of the fi rm’s international behavior. Oviatt & McDougal (2005) propose an alternative model focused exclusively on the speed of entry into foreign markets. With this model, the authors continue with the vision outlined in their previous work (Oviatt, Shrader & McDougal, 2004), in which the senior manager is responsible for studying the environment, identifying opportunities and acting in consequence. According to the authors, it is this role that justifi es the condition of entrepreneurship in the internationalization process. In their review of the literature, Rialp, Rialp & Knight (2005) propose a model that highlights three key issues: (1) the importance of the fi rm’s intangible resources as generators of international readiness; (2) that fi rmspecifi c international capability can be regarded as an unobservable or ‘invisible’ strategic asset mostly characterized by scarce home-based path dependencies but high levels of tacitness and causal ambiguity in its accumulation process, and (3), that the fi rm’s external environmental conditions play an important role in moderating the way in which intangible resources determine the strategic behavior of INVs. 3 SOME EXAMPLE OF THE INTERNATIO NALIZATION PROCESS OF MULTINATIONAL FAMILY BUSINESSES As mentioned above, many family businesses have managed to overcome the dilemma of expanding international activities to become multinational businesses, without losing control of the ownership of the fi rm. These are family multinationals - fi rms that own affi liated companies or subsidiaries, either for manufacturing or commerce, as a result of direct investments abroad (Brooke, 1986), and which, at the same time, maintain control of the fi rm’s ownership and strategic management (Donckels and Frohlich, 1991; Neubauer and Lank, 1998). Such fi rms exist across a broad spectrum of sectors and countries. 22 / GLOBAL MANAGEMENT JOURNAL In order to show some examples of the different aspects involved in the internationalization of family fi rms, we have looked at six such fi rms, paying special attention to those factors that determine the process of international expansion for this type of company. The examples were retrieved from public information offered by the fi rms and an analysis of specialist journals. The selected fi rms reveal some common characteristics that need to be taken into account, thus: (1) they are fi rms in which one family exercises ownership control; (2) they are fi rms with a multinational and, where possible, global presence; (3) they are fi rms with a long history, to enable a longitudinal analysis of the processes; (4) they have undergone a succession process, i.e. they should be in at least their second generation; (5) there is ample information available on the fi rm relating both to its international expansion and its family history; and (6) the selection should include a suffi cient variety of nationalities as to avoid any cultural bias. Therefore, Heineken (Holland), Michelin (France), Faber-Castell (Germany), SC Johnson, Cargill (United States), and Samsung (South Korea) have been chosen as examples for presenting our model. These are all currently global fi rms and each one operates in a different sector. The main characteristics of these fi rms is summarised in Table 2. 4 PROPOSED MODEL FOR INTERNATIONAL ENTREPRENEURSHIP OF FAMILY BUSINESSES Our literature review of the internationalization process of family businesses in the third section can be used to identify which variables would be signifi cant in the explanation of international entrepreneurship in this type of business. We have developed our proposed model on the basis of the theoretical literature regarding company entrepreneurship and the existing models that have attempted to study this kind of behaviour (Zahra and George, 2002; Oviatt, Shader and McDougall, 2004; Oviatt and McDougall, 2005), as well as on the literature that specifi cally covers the internationalisation of family businesses. The model is graphically illustrated in Figure 1. Our proposed model derives from our examination of the two major factors that infl uence a fi rm’s chosen strategy to expand internationally: knowledge and Table 2: Firms selected for the longitudinal case study Firm Activity Country Generation Family Foundation Heineken Beer Holland Fourth Heineken 1864 Samsung Conglomerate (electronics, advanced technology, fi nancing) South Korea Second Lee 1938 SC Johnson Domestic products USA Fifth Johnson 1886 Cargill Diversifi ed (grains) USA Fifth Cargill / McMillan 1865 Faber-Castell Stationery supplies Germany Eighth Faber-Castell 1761 Michelin Tyres France Fourth Michelin 1889 Figure 1: A model of International Entrepreneurship of Family Businesses Environment General environment (cultural, industrial , national, technological,…) Specific environment (family , competitive, social,…) Individuals and teams Active family members (past) Passive family members (present) Non-family members Managers Board Strategy Corporate strategy Competitive strategy International Entrepreneurship Extent Speed Scope Resources& Capabilities Technological resources& capabilities Reputation& image, etc. International Knowledge JOSÉ C. CASILLAS, ANA M. MORENO, FRANCISCO J. ACEDO / 23 commitment. These two factors form the foundation on which to build an international corporate strategy. Following in Zahra and George’s footsteps (2002), we uphold the need to place the individual at the outset of the internationalization process. Thus, although it is true that such behavior may respond to the identifi cation of new opportunities (Oviatt & McDougall, 2005), it is also possible that the fi rm’s international behavior stems from a proactive approach. Therefore, we need to analyse what individual attributes the senior managers and family members possess. Family-run businesses do indeed stand out from others in their search to control the fi rm from one generation to another (succession), in the involvement of family-members in the fi rm’s management (not necessarily professionals with purely economic motivations), and in the existence of bonds between the different shareholders. 4.1 Family characteristics and the internationalisation of family business 4.1.1 Familiar socio-demographic factors Although knowledge and commitment are crucial factors in the model, they are infl uenced by internal and external variables. Thus, from the family business perspective, the set of factors that explain the level of knowledge and commitment is linked to the people who are in some way involved with the fi rm. First, therefore, are those members of the family who are actively involved in the running of the business – either at management or board level. Secondly, we would point out the infl uence of those family members who do not take an active part in running the business but who hold a stake in the fi rm (either as family members and/or as shareholders). Thirdly, those family members who formerly took an active part in the management of the family business – the founder member, earlier generations etc. Preceding generations infl uence the model, both directly and indirectly. Earlier generations have a direct infl uence on the knowledge accumulated by the organisation, the family’s level of commitment to the fi rm and their previous strategies. Previous generations also exert (in the present but above all in the past) a strong infl uence over the current generation, whether or not they are involved in running the family business. Fourth and fi nally, it is important to highlight the role of external professionals, who are not members of the owning family but who are an important infl uence on the design and implementation of the fi rm’s strategies, either as managers or consultants. These four groups of individuals are sources of knowledge and commitment within the fi rm. The case of SC Johnson demonstrates the role played by family members over several generations and how such a differentiated profi le represents a source of knowledge for the fi rm. SC Johnson: Fifth-generation FMNC SC Johnson is a hundred-year-old family business that has always been run by members of the Johnson family. Its international presence is typical of a global fi rm, in that its products are sold in more than 100 countries, and has subsidiaries in 70 countries. It is a large family multinational that does not conceal its family characteristics, but makes it a feature of its publicity. Several important characteristics in the development of SC Johnson are relevant. First, the level of involvement of the current generation. The fi fth generation consists of four brothers, all of whom are involved in the company in one way or another. This close involvement is due in part to the fi rm’s succession policy since the fi rst generation, based on the idea that the ownership of the company passes to only one of the descendants. Secondly, each generation has been run by family members who have maintained the balance between their entrepreneurial and commercial role and their role as inventor or innovator. In fact, the current chairman of SC Johnson, Fisk, studied chemistry and physics and later took a Masters in engineering and an MBA in marketing and fi nance. Thirdly, we would point out the international orientation of those same family leaders. The founder, Samuel Curtis Johnson, set up facilities on several continents in less than three years. His son, Herbert Fisk Sr. concentrated on the product and product research and development. Herbert Fisk Jr. embodied the entrepreneurial spirit and the willingness to take on risk for the sake of improving the company. Finally, Sam was the architect of the company’s global expansion on all fi ve continents. 4.1.2. International Orientation From the International Entrepreneuship perspective, several authors defend the idea that one characteristic of the so-called “born-global fi rms” is that the entrepreneur always had a large-sized company in mind, right from the time he founded the fi rm, even though initially it was very small in size (Oviatt & McDougall, 1994). Strictly with regard to the internationalization of fi rst-generation fi rms, to a large extent such a process depends on the long-term vision of the fi rm’s founder and his company model. Therefore, the founder’s international orientation represents an essential dimension (Ditchl et al., 1990). Heineken is an example of a born-global family fi rm. 24 / GLOBAL MANAGEMENT JOURNAL Heineken: Global name and brand The Heineken family controls one of the most important brewing industry groups in the world. Heineken has demonstrated, since its foundation, more than 130 years ago, its drive for international entrepreneurship. This is a born-global family fi rm, which knew how to create a global company without having to lose family control. The fi rm’s international growth is the result of three generations of international entrepreneurs, driven by three spirited individuals with exceptional qualities for the international development of the fi rm: Geraard Adrian, Henry Pierre and Alfred Henry Heineken. However, it would be unfair to attribute the entire success and global growth of the company to these three individuals. From the fi rst, Heineken has worked with equally entrepreneurial people. Of note is the role played by Leo van Munching in the expansion of the company in the United States, as well as the role of the many directors who personally took on the same challenges to the company as the members of the Heineken family. A central question that must be taken into account is why some individuals but not others recognize and exploit opportunities (Bhave, 1994; Hills et al., 1997; Singh et al., 1999). Cognitive research can provide important insights into the understanding of the entrepreneurial process (Baron, 2004a) leading to internationalization decisions. For example, top management experience (Yli-Renko et al., 2002), and the perception that individuals have both about their fi rm and about the environment in which they operate, have been found to be signifi cant predictors of the internationalization process (Burton et al., 1987; Manolova et al., 2002). Through the study of perceptual processes, cognitive theory provides further insight to this question about identifying and exploiting opportunity (Matlin, 2002).Within this line of research, feature-analysis models suggest that complex patterns of events are identifi ed and stored on the basis of their distinctive features. New stimuli that individuals encounter later on are compared with the stored information and thus perceived differently by individuals with different past experiences (Baron, 2004a). Using the proposal by Leonidou et al. (1998)1, entrepreneurs familiar with foreign markets through travel (Dichtl et al., 1990), language knowledge (Lautanen, 2000), or through the experience of living abroad (Naor and Punj, 1984) will have a more positive attitude towards considering international expansion as an opportunity for growth than those without such experience. Manolova et al. (2002) label this set of personal experiences that confi gure a positive attitude toward things international as the entrepreneur’s international orientation. The influence of the individual entrepreneurdirector on the decisions to internationalize have been analysed from different points of view (Reid, 1981; Aaby & Slater, 1989). In this regard, two approaches stand out from the rest, each one related to three different levels of analysis. From Hambrick & Mason’s “Upper Ecehelons” approach (1984), certain socio-demographic characteristics in the individual account for the fi rm’s longterm strategic behavior. Such characteristics include education and training (study abroad), experience (tenure of positions in multinational fi rms or posts involving international dealings), his personal zeal for ‘international things’ (e.g. leisure trips abroad ), etc. (Gordon et al., 2000; Lant et al., 2000). For its part, there exists another broad current of papers focussed on the individual’s cognitive characteristics. From this point of view, his sociodemographic features are merely dimensions that attempt to identify the individual’s underlying mental map (Markoczy, 1997). The challenge is to fi nd out what cognitive features are related to the individual’s international orientation. 4.1.3. Commitment and internationalisation of the family business As well as knowledge, the second main factor in our proposed model is the family’s commitment to international activity. This factor put together the effects of the former aspects considered adding a plus as it set the direction of future strategy of the fi rm. From a sequential point of view the importance of commitment stands out as one of the main factors in explaining a fi rm’s internationalisation (Johanson and Vahlne, 1990). From this point of view, as the organisation increases its international activities, decisions lose a large degree of their reversibility, augmenting the risk to the increased resources that have been committed. Commitment to international activity in family businesses comes from two main sources; one external and the other from within the family environment. Two main external factors can be identifi ed: (1) the pressures of a competitive environment and (2) the fi rm’s competitive edge in the local market. Pressure refers to the geographic environment of the competing businesses, customers and suppliers, the degree of integration of the industry, and the existence of economies of scale that favour internationalisation, etc. (Grant, 1991). The competitive position of the fi rm within the local market affects its opportunities for expansion without the need to turn to external markets. Therefore, when a business is a national leader, the JOSÉ C. CASILLAS, ANA M. MORENO, FRANCISCO J. ACEDO / 25 opportunities for growth within its own country and, consequently the need to commit resources abroad are increased. Michelin’s expansion is an example of this, as the company decided to enter emerging global sectors where the fi erce competition forced it to swiftly become a multinational. Michelin: Global innovator Michelin is a family business that has pursued innovation and international entrepreneurship since its founding at the end of the nineteenth century. Michelin is the result of the entrepreneurism of various members of the Michelin family. Despite its current size, members of the owning family continue to have an important involvement within the fi rm. There are several interesting aspects in the history of this French family fi rm. Firstly, the fundamental role of innovation as the main source of competitive advantage. Secondly, the global, rather than merely international orientation, demonstrated since its foundation, by the family members leading the fi rm. Thirdly, the speed and coherence of the expansion and diversifi cation process. Fourthly, the social signifi cance of the family name as a global brand. In little more than a century, since the end of the 19th century, André and Edouard Michelin’s small workshop has been transformed into a holding company with a presence on all fi ve continents, with factories in more than 20 countries, 70 distribution companies, four technology research centres, six rubber plantations, almost worldwide distribution (branches in over 170 countries) and more than 130,000 employees across the globe. In contrast to these two factors outside the family environment, two other factors can be identifi ed, linked to the distinctive character of family businesses. These two factors are (1) the degree of international orientation within the family and (2) the strength of leadership shown by the management. The degree of international orientation within the family refers to the extent to which members of the owning family believe that the natural geographical scope of the business should be limited to its country of origin or if, on the other hand, it can be extended beyond this (Gallo and Sveen, 1991; Menéndez, 2005). This international orientation affects perceptions of the international environment; the levels of risk involved in increasing activities abroad; the extent of the owners’ cognitive and psychological differences with regard to other cultures; etc (Zahra, 2003; Casillas and Acedo, 2005). The most outstanding feature of the German multinational, Faber-Castell, is its ability to maintain its international orientation over eight generations. Faber-Castell: Leadership in an eighth-generation multinational fi rm Faber-Castell is a German company that is more than two hundred years old. The company has passed through many different stages, and has certain characteristics worth noting. Of these, three aspects stand out. The fi rst is the sequential, gradual and belated nature of the internationalisation process. After more than 240 years, the fi rm has 15 factories, 13 of which are outside Germany, and 19 sales subsidiaries. However, the majority of these foreign operations have been created within the last 50 years. It was only under the leadership of the current CEO, Anton Wolfgang von Faber-Castell, that the process was intensifi ed. In 1978, when he took up his current position, the company only owned four factories outside Germany (in Austria, Brazil, Peru and Australia). Since then, another nine factories have been opened, in particular in South America and the Asia-Pacifi c region. This is linked to a second factor: the different role played by the different generations running the business. During the company’s eight generations, only some have demonstrated international entrepreneurship, and so certain individuals join a cast of ‘heroes’, who are remembered for their entrepreneurial drive and their legacy. Nor should we forget, when looking at commitment to international expansion, the role of (non-family) professional managers and advisors. In the preceding paragraphs we have assumed that the company is run by managers and boards who are all members of the owning family. However, we know that it is not always so (Graves and Thomas, 2006). In fact, as the family business progresses through the later stages of its life cycle (Greiner, 1972; Churchill and Lewis, 1983; Rosendbladtt et al., 1977), the proportion of non-family managers and board members increases. This can weaken the level of commitment to the international strategy (Gallo and García-Pont, 1996; Graves and Thomas, 2006). 4.2 Knowledge and the internationalisation of family business Over the last few years, several studies have suggested that knowledge is not just another resource of the business but one of the key factors for understanding a fi rm’s international behavior (Sharma and Blomstermo, 2003; Zahra, Sapienza and Davidsson, 2006). Knowledge is the essential factor in the sequential view of the internationalisation process (Johanson and Vahlne, 1977), according to which, fi rms expand their activities internationally through a learning process, either as the fi rm accumulates experiential knowledge (Penrose, 1959; Johanson and Vahlne, 1990) or through a process of planned international activities (Yip et al., 2000). 32 / GLOBAL MANAGEMENT JOURNAL Samsung Family History 1938: Byung Chull Lee founds Samsung 1987: Byung Chull Lee retires and is succeeded by his son, Kun Hee Lee. Company History 1938-Starts the business as a fi sh and food products merchant 1953-1987 Company diversifi cation; 1958: life insurance; 1963: department stores; 1965: newspaper publisher; 1969-1973: Electronics industry; 1974: Petrochemical industry; 1979: Aerospace industry; 1985: Development of information systems and technologies. 1988: Refounding of the company. Company restructure. 1990- Policy of global production and the opening of production units outside Korea 1993: Begins production in China and acquires subsidiary in Germany 1994: Offi ces in Japan and Germany. Factories in China and Mexico. 1995: Offi ces in USA, Europe, China and Singapore. 1996: Three new plants in Texas (USA) 1997-1999: Crisis in Korea 2006 Global company SC Johnson Family History 1886: Samuel C. Johnson founds the company 1919: Herbert Fisk Johnson Sr. (2nd G.) succeeds Samuel C (†). 1928; Herbert Fisk Johnson Jr. (3rd G.) succeeds after his father’s sudden death. Succession problems 1935: Expedition to Brazil. 1954: Sam, (4th G.) joins the company 1959: Sam elected vice-president and moves to Europe. 1965: Herbert Johnson Jr dies and is succeeded by his son, Sam. 1985-1990: Fifth generation joins the fi rm Company History 1887: Launch of its fi rst major product (Johnson Prepared Wax). 1914-1920: Foreign expansion. First subsidiary in the UK (1914), Australia (1917) and Canada (1920). 1929: Great Depression 1959: New product lines (insecticides, domestic cleaning products, etc.) 1950-1960: Entry into Germany, Mexico, Italy, Phillipines, Argentina,… 1960-2000 Gradual global expansion in all 5 continents: Europe (Spain, Norway, Sweden, Greece, Portugal, Belgium, …), America (Costa Rica, Puerto Rico, Chile, Colombia, Ecuador, Uruguay, …), Asia (Singapore, Thailand, China, Taiwan, India, Vietnam, …) Africa (Ghana, Kenya, Egypt, Saudi Arabia) and the Pacifi c (Australia, New Zealand). 1995-> Entry into Central and Eastern Europe (Russia, Czech Rep, Poland, Bulgaria,…). JOSÉ C. CASILLAS, ANA M. MORENO, FRANCISCO J. ACEDO / 33 REFERENCES: Aaby N.E., and Slater S.F. Management in-[1] fl uences on export performance: a review of the empirical literature 1978-88, International Marketing Review, Vol. 6, No. 4, 1989, pp.7-27. Andersen, O., and Kheam, L.S. 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