Exploring the role of family ownership in internationalization: empirical investigation of Indian firms

Purpose: Internationalization is an important strategy for the long-term survivability of the firms and is often influenced by the ownership groups along with the family involvement in the management decisions. The purpose of this study is to investigate empirically the outward propensities of various ownership groups such as foreign institutional investors, domestic mutual funds and lending institutions. Design/methodology/approach: This paper analyzes the moderating effects of the family’s influence on the relationship between various ownership categories and internationalization, which is measured in terms of foreign investments and export intensity. An analysis of listed non-financial Indian firms recorded during the years 2005–2019, constituting a panel of 43,928 firm-year observations was conducted by using the tobit and probit panel regression models. Findings: The results demonstrate that internationalization of the firm is positively impacted by the foreign institutional investors and lending institutions. However, when the family ownership is moderated across the ownership categories, it can be seen that it negatively impacts the lending institutions and positively impacts the foreign institutional investors. In the case of mutual funds, no impact of family ownership in the firm’s foreign investment decisions can be seen. Originality/value: As there are limited studies about family ownership influence on the firm’s internationalization decision in the context of India, this paper takes an inclusive approach to the changing nature of the influence of ownership on the international expansion process.