Internationalization of Family Firms: A Dynamic Capabilities Perspective

Abstract: Background: Increased competition and fast-changing and global markets are the major characteristics of today’s business environment. Family firms need to adapt to these changes and more often pursue an international expansion themselves to remain competitive. The concept of dynamic capabilities has been developed to explain how businesses can react to changes in the environment to sustain a competitive advantage. The internationalization of a family firm can be such a change in the environment  Purpose:The purpose of this study is to analyze the internationalization of family firms through the lens of dynamic capabilities.  Method: We use a qualitative case study design with four cases representing four family firms that have gone through an international expansion. Through semi-structured interviews we extract the data from the family firms. We develop a framework out of the literature as a basis for the analysis and present a revised framework with the results of the study.  Conclusion:The analysis shows there are certain capabilities that help family firms in the internationalization process. Sensing capabilities include network and market scanning capabilities and assist family firms with finding new opportunities in foreign markets. Seizing capabilities include decision-making and managerial capabilities and are used to adjust the resource base to exploit the prior sensed opportunities. Lastly, with transforming capabilities, which consist of entrepreneurial and learning/knowledge capabilities, family firms can continuously reconfigure their resources to improve processes and structures towards the new international environment. Various aspects of familiness influence the development of these dynamic capabilities