Navigating international entry via strategic alliances: Comparison of family and non-family firms

Abstract

International strategic alliances (ISAs) serve as an important vehicle for growth, international expansion, and access to technology and other resources. The choice of governance structure in ISAs—specifically, whether to form an international joint venture (IJV) or an international non-equity alliance (INEA)—is a pivotal decision for firms. However, despite the importance of this choice, the influence of firms' ownership heterogeneity on the choice remains underexplored. In order to address this gap, this study compares family-owned and non-family-owned firms to examine their differing preferences between IJVs and INEAs. Drawing on an integrated risk perspective and the mixed-gamble socioemotional wealth perspective, we argue that family firms exhibit a greater propensity to choose IJVs over INEAs than non-family firms. Moreover, we posit that this preference is amplified by two factors: (1) the industry-relatedness of the alliance partners and (2) the focal firm's prior experience in the partner's home country. Empirical analysis of 1216 cross-border dyadic alliances formed by publicly listed Indian firms between 2000 and 2022 provides robust support for our hypotheses. This study contributes to the literature on international strategic alliances and family firms' internationalization by shedding light on the nuanced governance preferences of family firms in cross-border collaborations.