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International and product diversification – which strategy suits family managers?

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Stadler, Christian, Mayer, Michael C. J., Hautz, Julia and Matzler, Kurt (2018) International and product diversification – which strategy suits family managers? Global Strategy Journal, 8 (1). pp. 184-207. doi:10.1002/gsj.1190 ISSN 2042-5791.

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Official URL: https://doi.org/10.1002/gsj.1190

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Abstract

This paper explores the impact of family and professional managers on performance and how this relationship is affected by international and product diversification. Using a dataset of 262 German firms from 2000 to 2009, we find that an increasing proportion of family managers on the management board is associated with higher performance. This relationship is negatively moderated by higher levels of international diversification but reinforced by increased product diversification due to differences in the human and social capital between family and professional managers. Firms with a significant presence of family members on the top management team (TMT) face a choice of either adopting a corporate strategy that runs counter to “global-focusing” or adjusting the balance of family and professional managers in the TMT.
Managerial summary

Deciding the extent of family involvement on the executive team is a key strategic decision. While our research supports the general proposition that family managers will enhance performance we show they don't have the same positive impact in all situations. More precisely, we show that family managers are more suited to lead diversification than internationalization. If a family firm wants to go international it therefore is sensible to increase the proportion of professional managers on the executive team. Diversifying into new product markets, however, does not require outside expertise commonly associated with professional managers.

Item Type: Journal Article
Subjects: H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HF Commerce
J Political Science > JZ International relations
Divisions: Faculty of Social Sciences > Warwick Business School
Library of Congress Subject Headings (LCSH): Family-owned business enterprises , Family-owned business enterprises--Personnel management, Globalization , Diversification in industry
Journal or Publication Title: Global Strategy Journal
Publisher: John Wiley & Sons Ltd.
ISSN: 2042-5791
Official Date: February 2018
Dates:
DateEvent
February 2018Published
22 November 2017Available
25 May 2017Accepted
Volume: 8
Number: 1
Page Range: pp. 184-207
DOI: 10.1002/gsj.1190
Status: Peer Reviewed
Publication Status: Published
Access rights to Published version: Restricted or Subscription Access
Date of first compliant deposit: 28 September 2017
Date of first compliant Open Access: 22 November 2019
RIOXX Funder/Project Grant:
Project/Grant IDRIOXX Funder NameFunder ID
13166Oesterreichische Nationalbankhttp://dx.doi.org/10.13039/501100004061

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