College of Business and FinancePostgraduate Council (PGC)
MBA Program
Family Business internationalization:
Challenges, Strategies, and Performance
Outcomes
By
ALI HASSAN ALDERAZI
202210052
A research proposal in partial fulfillment of the requirements for the Master of
Business Administration, College of Business and Finance, Ahlia University
Manama, Kingdom of Bahrain
January 2023
1. Introduction:
Globalization is the worldwide interconnectedness at the cultural, political and
economic levels, which results from the abolition of barriers to
communication and trade, increased economic interdependence among
countries, as evident through cross-border flows of three types of factors:
goods and services, capital, And technical knowledge. (Blanzo-Mazagatos,
2022). History has shown that family entrepreneurs have made a difference
throughout the ages, from Henry Ford and Sam Walton to Lotfi Mansour and
Onsi Sawiras. The achievement of these founders and business owners has
enhanced people’s lives as well as the local and global economy. The
importance of the leadership succession process has begun to appear as one
of the most important aspects of family business, as the activities and events
that contribute to changing leadership from one individual to another are
referred to as leadership succession (Yahya Al-Hussein, 2023)
Since the 1980s, the idea of studying family businesses, and all businesses
related to them, has emerged due to their importance in the global economy.
They have also been recognized as one of the tributaries of the international
economy, as American studies have shown that more than 90% of American
companies are originally family businesses, and it has spread. This quality is
within the Arab countries. Family companies are considered one of the oldest
types of companies in the world, and they constitute 70% of the companies in
the economic institutions in the world. This type of company has become a
steady increase. On the level of the European continent, family companies
represent 85% of the companies in it, and they contribute with approximately
60% of the labor market, according to economic statistics in 2015, family
companies represented $90 billion of the economy of those countries.
Examples of these companies in the Arab Republic of Egypt include Al-Rasheed
Company, which was established in 1889 AD, and still exists to this day. It
exercises its role in contributing to the economic activity of the state, and in
the Gulf region, family companies represent one of the most important pillars
of the economy due to the nature of the region and its Bedouin origins, as
tribal and family rapprochement is one of the reasons that supported the
presence of this type of companies, and this type of companies has flourished
in There has been progress in transporting goods across countries and near
the Gulf states (Qarsham, 2023).
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Increasing it is an essential and indispensable component for stimulating the
economy and thus contributing to the development of the country. Perhaps
one of the most important components of the private sector is family
businesses, which have become a major contributor to the gross domestic
product. Therefore, the need has emerged to develop the management and
ownership structure of these establishments to overcome all the challenges
that may arise. facing them, as converting the latter into public joint-stock
companies in which ownership is separated from management will enhance
the possibility of growth and continuity of these companies and the expansion
of their activities (Boukhrouba Marwa &. M., 2012).
While family businesses face challenges in sudden economic conditions.
According to the latest statistics issued by family businesses for the year 2017,
family businesses represent about two-thirds of all companies around the
world (De Massis, 2018).
Over the past two decades, research on the effects of family involvement in
internationalization has been gaining relevance The scholarly attention can be
attributed to the pivotal role that family firms play in the economic landscape
and their growing presence in non-domestic markets (Cirillo A. M., 2022).
Prosperity and advancement in global markets have become essential for many
family businesses, and trying to understand access to global markets
represents a research gap that academic research has not yet filled. The
majority of research is limited to looking at export because it is the easiest
method to deal with, while neglecting the challenges and opportunities
available in other entry methods. (Alon, Ranfagni, Vescovi, & Vianelli, 2020).
Accordingly, this research attempts to know and identify the challenges that
help in understanding how family businesses can overcome obstacles
Challenges, Strategies, and Performance Outcomes.
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1.1The research problem
After examining some of the research related to the internationalization of
family businesses, studies have not adequately addressed the mechanisms
through which family involvement is formed and the determinants of its
operations and performance outcomes around it are still largely poorly
understood and largely unstudied. Therefore, this research will contribute to
trying to understand family business strategies by studying the roles of
different sources of family business heterogeneity and context in shaping the
determinants, processes, and outcomes of business internationalization. We
set an agenda for further research aimed at promoting a more detailed and
contextualized understanding of internationalization in family firms.
1.2Research objectives:
➢ Trying to understand and study the strategies facing family businesses
during internationalization.
➢ Choosing innovative strategies that reduce the obstacles of family
businesses and their effects on performance.
➢ Trying to reach the optimal solution for these strategies directed at family
businesses, as recommended by previous studies.
1.3The research questions.
The main question includes: “How do family businesses face challenges during
internationalization”?
The main question includes sub-questions that the research will answer, which
are:
• To what extent do family businesses apply appropriate strategies during
the internationalization process?
• How do the strategies currently used affect performance?
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• How can these strategies be measured and formulated to reduce family
business obstacles during internationalization?
1.4The purpose of the study
It is knowing how to choose appropriate strategies for family businesses and
the challenges they face during internationalization.
2.
Literature Review
Over the past years, international business scholars have widely investigated
whether and how internationalization affects firm performance, resulting in
theoretical confusion and inconclusive empirical evidence regarding the brand
and form of the firm. The relationship between internationalization and
performance (Costa, 2022).
Accordingly, we will review some of the studies that were discussed on the
topic of Family Business internationalization Challenges, strategies, and
performance outcomes.
Previous studies revealed contradictory results and concluded that there is a
positive, neutral, or negative effect of internationalization on the performance
of these companies.
The study relied on (Cirillo A. M., 2022)the generational inheritance
methodology. When family businesses embrace millennials, they rely on two
types of characteristics: family membership and societal generational
membership.
It was found, through the analysis of an Italian family company, that when
millennial families participate, it has a positive impact on increasing exports
and increases the positive impact on them. While the CEO from outside the
family turned things around so that the effect of the Millennial family’s
involvement becomes unipositive
The study (Graves, 2022) discussed some of the family-focused objectives and
strategic behavior of family businesses One of the important features that
distinguish family businesses from their non-family counterparts is their pursuit
of goals that stem from and revolve around the family’s values and interests.
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Unlike business-focused goals, which mostly focus on creating and growing
financial well-being, family-focused goals often serve the family’s noneconomic goals.
This study (Espeche, 2023) measures some differences in innovative behaviors
between some international family companies and non-family companies since
the changes began before and after Covid-19, that is, from economic growth to
a state of decline, then recovery. It included a large sample of manufacturing
companies in Spain and using… The comparative approach for the three
periods: The results revealed that the methods of innovation activities that
stimulate internationalization through exporting in family and non-family
companies differ between the periods, which should be said that the causal
effect of innovation on internationalization depends greatly on environmental
conditions. In comparison with non-family firms, the results show that when
family firms internationalize, they must practice expanded methods and
diverse directions in innovation activities.
This study (Yahya Al-Hussein, 2023) targeted family companies in the Egyptian
private sector in the pharmaceutical industry, to overcome the risks of the
continuity of family enterprises. In our current time, which is full of challenges,
the need for professional successors who have “entrepreneurship”
characteristics is increasing more than ever before. This study followed the
comparative approach, and analytically, the study concluded that there is a
significant positive relationship between the effectiveness of leadership
succession planning and the continuity of family businesses. It was also
recommended that future research should focus on longitudinal studies, where
researchers accompany family businesses over a longer period to assess their
communication patterns during the transition process. For this reason, future
research should also use accompanying methods, such as focus groups or
individual interviews. Hence, it would be beneficial for future research to apply
the study in different industries to see how these findings can be replicated
and generalized.
This study
(Varas-Fuente, 2022) dealt with some analyzes of the
internationalization processes of family businesses, other than the lack of
sufficient inference about the performance and methods followed during the
internationalization of companies. Accordingly, some standards about theories
of capacity and resources were discussed. Based on what was obtained from
statistical surveys on the business strategies of Spanish family companies, the
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sample size was 285 companies that followed traditional methods and 107
companies that followed traditional methods. Newer methods were followed.
The study concluded the following: Specifically, new methods allow for
increased performance at higher levels of internationalization, unlike
traditional methods.
In conclusion, through previous studies that addressed some of the challenges
during the internationalization of family companies, as well as studies that
recommended the use of modern paths and trends, this research will shed light
on some of the strategies that hinder family companies during
internationalization (Costa, 2022) – (Espeche, 2023) other previous sources.
as the study explained (AL-Dien) Strategic options in the global market:
Global strategy and country-specific advantage.
Manufacturing conditions/order conditions.
• Related and supporting industries.
• Companies, their structures, strategies, and intensity of competition.
• Achievements of intercultural interaction
• Different aspects of culture in a multinational company
• Should value chain activities be centralized?
• Clustering approaches.
• Centralization or profiling
• Preparing, coordinating, and designing the strategy.
• Factors affecting the formation of strategy preparation options.
• Coordination.
• The influence of culture on strategy.
3. Research Methodology
This research will rely on the descriptive analytical approach to the study, as
well as by obtaining the data necessary to conduct statistical analysis, and to
learn about the opinions and trends of a sample, through inquiring about them
using personal interviews to obtain results that are interpreted in light of the
research topic.
3.1
Research design
This study will follow the descriptive analytical approach, which is based on
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describing, procedures and exploring some strategies Continuing the research
topic on the challenges of family businesses and how to analyze them in the
field.
2.2
Types and sources of data
Two types of sources will be relied upon to collect information in this study:
primary sources and secondary sources.
)1(Primary sources: These are the sources that will be collected for the first
time, through survey lists, in order to learn the opinions of the study subjects,
know their demographic characteristics, and reach results that contribute to
testing hypotheses and achieving the objectives of the research.
(2) Data addressed for the first time: These are sources that have been
previously recorded and are used. These sources were used through some
previous Studies that addressed the research topic, with the aim of describing
the problem and identifying the weaknesses and shortcomings that must be
covered in this study.
3.3
Data collection techniques
As the aim of the study is to identify the reality of the challenges and
strategies,
and to achieve the research goal, a survey list will be
designed directed to the study community, and since the value of
scientific research can only be achieved by linking the scientific aspects
to the practical aspects, the survey will therefore be conducted for the
individuals in the study sample who are owners of companies. And its
employees have the knowledge to access strategies that help improve
the performance of family businesses, by answering the questions
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contained in that list. From this logic, the methodology of the study is
presented as the basic foundation on which the field study depends,
with the aim of clarifying how to design lists and calculate the validity
and reliability coefficients for the dimensions. Survey lists, determining
appropriate statistical analysis methods for the data, and testing
research hypotheses.
The research data will be collected from a set of information covered by the
references mentioned, and through interviews and a survey of the group
from the study sample, which represents part of the community or a
group of individuals from it, to collect information from them, and then
it can be circulated to the rest of the community members, and the
survey will be done. Using the five-point Likert scale method for family
companies in Bahrain from the period (2023/2025) to determine the
sample size:
.)3( Determine the sample size: Using the following equation to estimate the
sample size.
n=[p(1-p) /[d2/z2])
1 .d: The percentage of error allowed in the estimate is 0.05
2 .Z: standard score corresponding to the confidence level = 95%)1.96(
3. P: A ratio that provides the property and is neutral and equals 0.5
3.4 Data analysis and interpretation
The problem of the study lies in confronting the challenges facing family
businesses. Therefore, the study will depend on analyzing the strategies that
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were discussed in previous studies and attempting to analyze the opinions of
the study sample about those strategies using the statistical analysis program
SPSS and some statistical analyzes such as Cronbach’s alpha to measure the
stability of the questionnaire.
➢ Internal consistency coefficient
➢ Confirmatory factor analysis
➢ Descriptive statistics
➢ and standard deviation
➢ Regression analysis and correlation analysis to test hypotheses through
Amos software.
➢ Methods of statistical analysis of data and testing hypotheses.
➢ Analyzing data and testing the study hypotheses.
4.
Timeframe and Work Plan
The structure of the study is represented by the study chapters divided into:
Chapter One/General framework of the study:
The first chapter contains the general framework of the problem, which was
identified by examining some previous studies related to the subject of the
study. This chapter also addresses the objectives, importance, and hypotheses
of statistical analysis. It also includes previous studies, commenting on them,
identifying the research gap, and identifying weak points.
Chapter Two: The theoretical framework of family businesses’ concepts,
challenges, strategies, and performance
Chapter Three/Study Methodology Chapter:
It includes the scientific methodology on which the study relied, including
hypotheses and the method of measuring variables. It includes methods of
measuring variables, types of data sources, design of the survey list, population
and sample, method of collecting data and information, and how this data will
be processed to reach the results of the study.
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Chapter Four: Data analysis and hypothesis testing.
This chapter also deals with the statistical methods and methods used to
analyze and process study data and test hypotheses, including knowing how to
reach results and obtain from them appropriate recommendations for the
subject of the study.
Chapter Five: Results and recommendations chapter
This chapter includes the results discussed in the study, recommendations, as
well as future recommendations.
•Arabic and foreign references.
• Appendices.
4. Timeframe and Work Plan
The date time will take a while to study:
November
Task
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1 Research Proposal & approval
2 Introducation
3 The research problem
4 Research objectives
5 Literature Review
6 Research Methodology
7 Research design
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References
5. References
AL-Dien, B. A. (n.d.). Internationalization strategy in multinational companies.
15.
Alon, I., Ranfagni, S., Vescovi, T., & Vianelli, D. (2020). Opportunities and
challenges in internationalization of family business. italian journal of
management, Vol. 38(Issue 2), 11-17.
Blanzo-Mazagatos, V. D.-G. (2022). Involvement of multiple generations in
management and internationalization of family firms in Spain: the
moderating effect of SEW dimensions. . Journal of Family Business
Management.
Boukhrouba Marwa, &. M. (2012). The role of family companies in stimulating
the stock market. 1-130.
Cirillo, A. M. (2022). Exploring family millennials’ involvement in family
business internationalization: Who should be their leader?.. Journal of
family business strategy( 13(3), 100455.).
Costa, J. (2022). Internationalization strategies at a crossroads: Family business
market diffusion in the post-COVID era. Economies. International
Business Review, 31(4).
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De Massis, A. F. ( 2018). Family firms in the global economy: Toward a a deeper
understanding of internationalization determinants, processes, and
outcomes. Global Strategy Journal(8(1)), , 3-21.
Espeche, J. F.-N.-V. (2023). Innovation and internationalisation during times of
economic growth, crisis, and recovery prior to Covid-19: A
configurational approach comparing Spanish manufacturing family and
non-family firms. Journal of Family Business Strategy, 1(14).
Graves, C. S. (2022). Family-centred non-economic goals and the
internationalisation of family firms: Evidence from Australia.
International Business Review, , 31(4), 101974.
Qarsham, &. A. (2023). Family business form. . Journal of Legal and Economic
Research(14(85),), 573-672.
Varas-Fuente, O. J.-S.-M. (2022). Internationalisation and performance in family
businesses: influence of the internationalisation path followed. .
International Journal of Entrepreneurship and Small Business,(46(2), ),
185-209.
Yahya Al-Hussein, A. O. (2023). The impact of leadership succession planning on
business continuity in family companies, an applied study on the
Egyptian private sector. Scientific Journal of Business and Environmental
Studies(14(2)), , 801-857.
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