Information Sharing,Price Negotiation and Management Buy-outs of Private Family-owned Firms

Perspectives relating to agency theory, information asymmetries and game theory were utilized to explore two outcomes associated with the management buy-out (MBO) or management buy-in (MBI) of former private firms: whether information was shared equally between vendors (i.e., family firm owners) and purchasers (i.e., MBO/I management teams) and whether a mutually agreed price was achieved. With reference to the themes of company ownership structure, governance structure and company objectives several hypotheses were derived. Survey evidence was gathered from the managers of 114 former private family-owned firms located across Europe that recently reported an MBO/I. Multiple logistic regression analysis detected that respondents in founded (first generation) family firms and those reporting a high focus on the strategic importance of the market value increment were more likely to report that ‘information was shared equally between vendors and purchasers’. Respondents reporting no suitable family successor had been identified, a high focus on the strategic importance of the market value increment, and the involvement of venture capitalists in succession planning were more likely to report that a mutually agreed sale price had been achieved. Implications for practitioners and researchers are discussed.      

China's outward foreign direct investment: Location choice and firm ownership

This article evaluates the international location decisions made by public listed Chinese firms during the period 2006-2008, using a Poisson count data regression model. Further, we categorize the firms into state-controlled and privately owned according to majority ownership. We find that the determinants of internationalization differ based on ownership. State-controlled firms are attracted to countries with large sources of natural resources and risky political environments. Private firms are more market seekers. Although all firms have strategic intent, the attraction is commercially viable technology rather than core research content. Our findings also show that existing theories can sufficiently explain the actions of private Chinese firms, but adjustments are needed to understand the behavior of state-controlled multinationals.     

Marketing control and performance in early-growth companies

This article examines the relationship between market performance and marketing control systems used by early-growth electronic component and instrument manufacturers. Essentially, “marketing control” means keeping things on track. Long pushed aside by the excitement of planning and organizing business ventures, controlling operations, particularly marketing operations, has received little attention. This is regrettable because control is the only mechanism which ensures that resources are allocated efficiently and that strategic objectives are met. Also, for the early-growth high tech company, which is already in a state of flux, developing an appropriate marketing control system is essential to its ability to meet and respond to the recurring challenges brought about by the pace at which change is occurring.In this article the author examines the issue of marketing control from a theoretical as well as an empirical perspective. First, the author presents a framework for evaluating the marketing control system within a company. The core of the framework presents the essential elements of marketing control: feedback and corrective action. Bounding the core is:

1. 1. The Formal Marketing Organization. Delimits the company's capability to enact the control processes.

2. 2. Marketing Culture. The subjective, interpretive aspect of organizational life, which determines what control components and marketing structure are valued in the company.

The framework is used to analyze the marketing control systems of 20 early-growth high tech manufacturing companies. Four hierarchical configurations of the control system elements are identified and the companies assigned to one of the following configurations:

1. I. seeking some sales.

2. II. making good on sales.

3. III. seeking profitable sales.

4. IV. making profitable sales.

Four companies possessed none of the elements of control. There were merely operations which produced results. As a consequence the companies were judged to be generally unsuccessful in focusing their resources on the markets that they wished to serve. In addition, the market performances of these firms, relative to others in the sample, were poor. Ten Stage II companies, in their attempts to expand sales and to remedy logistical problems associated with making deliveries on sales, had developed formal sales departments. Unlike the four companies which were placed in Stage III, these companies put little emphasis on the financial accountability of sales and marketing. Consequently, their abilities to evaluate or steer profit performances mitigated against their achieving high levels of market performance. Only two companies were judged sufficiently different from other companies to warrant placement in Stage IV. These companies focused on developing marketing structures and reporting procedures which provided real time feedback on market performances. Because of this, they appeared able to identify market opportunities that were defensible in the long run and in which they could exercise control over profits.In conclusion, the findings indicate that greater control of marketing operations correlates with stronger market performances. When performance is measured in terms of absolute sales, sales growth. cumulative cashflow and profitability, companies with more evolved marketing control systems perform noticeably better than do others in the sample.     

Internationalization strategy,financial constraints and assets (in)tangibility. A study of euro area countries after the 2008 crisis

This paper studies the determinants of companies’ performance during the crisis based on their short-term (sales changes) and medium-term (exit) reaction, using firms’ data from the European Firms in Global Economy (EFIGE) survey and combining them with balance-sheet statistics. The results, based on the four largest euro area countries show that vulnerability to the crisis depended on a company’s mode of international operation. More sophisticated forms of internationalization increased firms’ resilience in the first and second waves of the crisis. The paper also investigates the mediating role of intangible assets and financial constraints in the relationship between internationalization and companies’ response to the crisis. While intangible assets were very important for preventing a drop in sales for internationalized firms immediately after 2008, they amplified the probability of firms’ exit five years after the crisis in weaker European countries (Spain and Italy). At the same time, financial constraints increased companies’ probability of exit. Innovation prevented a drop in firms’ sales and firms’ exit.     

The influence of ownership structure and board strategic involvement on international sales: The moderating effect of family involvement

This paper contributes to the family business and the international business literature by analysing whether and to what extent different compositions of the ownership structure and degrees of board strategic involvement impact on the level of international sales of family and non-family businesses. Our main hypotheses are tested on a sample of 342 Norwegian firms via regression analysis. The results from this study show the existence, in both in family and non-family businesses, of a positive and significant relationship between foreign investors’ ownership and the level of international sales. Furthermore, the relationship between CEO ownership impacts negatively on international sales in both family and non-family businesses. While board strategic involvement contributes positively to international sales in non-family businesses it becomes not significant when we only look at family businesses. Implications for theory and practice and future research directions are discussed.     

The characteristics and performance of Japanese FDI in less developed and developed countries

Data on 26,857 Japanese foreign investments in 150 countries and regions over the 1991–1999 period reveal that there are stark differences in the characteristics and performance of Japanese FDI (JFDI) between less developed countries (LDCs) and developed countries (DCs). JFDI in LDCs has been growing more rapidly over the period, and it is concentrated in the Secondary industrial sector, with a lower level of control within a subsidiary, and has been initiated by parent firms with market-seeking and labor-seeking purposes and with relatively weak ownership advantages. In contrast, JFDI in DCs has maintained relatively stable growth over the period, is concentrated in the Tertiary industrial sector, with a higher level of control within a subsidiary, and has been initiated by parent firms with market-seeking and strategic-seeking purposes and with relatively strong ownership advantages. JFDI in LDCs tended to attain a higher financial performance and a lower exit rate, yet with a greater variance, than those in DCs.     

On the Growth of Micro and Small Firms: Evidence from Sweden

The relationship between the size, age and growth rate of firms is examined for a large sample of micro and small firms in Sweden. These firms have between 1–100 employees and operate in a geographically concentrated area. Micro and small firms are dominant in the industrial structure and thus their growth patterns are crucial to the economic growth of the region. The period of study is of particular interest because it allows us to evaluate the effects of various regional development policy programs on the growth and formation of firms. The data is an unbalanced panel covering the period 1993–1998. We allow for the exit and entry of firms. The growth rate is defined in terms of the number of employees, sales and assets. In the estimation of the growth rate we control for various factors characterizing the sample firms, their capital structure, performance, human capital, and local labor market conditions. Our results show that the relationship between the growth, size and age of firms is very sensitive with respect to the method of estimation, functional form and definition of growth and size.     

Sales driven company

Selling has become dispersed through the use of selling teams that include members from functional areas other than marketing or sales. This now occurs within many firms utilising key account management strategies, within both business-to-business and business-to-reseller environments. This article is aimed at developing a better understanding of factors affecting ‘team selling’ and its impact on sales performance, with clear benefits to company management.     

Export performance of small firms from small countries: The case of New Zealand

Drawing on traditional models of multinational expansion and organisational learning, Brouthers et al. (J Int Mark 17:21–38, 2009) prescribe that in some circumstances, small firms exporting from small countries should concentrate their exports into a single overseas market. These particular circumstances pertain to small Greek and Caribbean exporters in mature low-technology industries. This research extends this 2009 study to the same size group of small firms in another small country, New Zealand. Model estimation involved multiple regression methods on survey data from 249 small New Zealand exporters. Contrasting with Brouthers et al.’s advice, this study finds that small New Zealand exporters should not concentrate their exports into one or a few overseas markets. Success for these small firms stemmed from higher rates of R&D expenditure and multi-market exporting through company-owned channels in distant markets. These differences reflect the different environments and sample characteristics between the two studies. The paper contextualises further the evidence base on the strategies that small firm owner-managers should pursue and policy makers should promote.     

Endogenous Market Structures in the Presence of a Socially Responsible Firm

We consider the endogenous selection of strategic contracts in an asymmetric duopoly with substitutable goods. the duopoly comprises a typical managerial firm with a sales delegation and a socially responsible firm (CSR firm) with a linear combination of social welfare and quantity as its managerial delegation contract. In particular, we examine how the equilibrium market structure changes from the case wthere both firms adopt sales delegation contracts to the case wthere one of the firms becomes a CSR firm, after the owners of the firms select their strategic contracts. We show that two market structures that are asymmetric with respect to their strategic contracts can become equilibrium market structures under the pure strategic contract class. Furthermore, we consider a unique mixed strategy equilibrium to examine how the risk domination between the two asymmetric equilibrium market structures affects equilibrium selection. there, we find that the competition wthere the firm with the sales delegation and the CSR firm have a price contract and a quantity contract, respectively, risk-dominates the competition wthere the firms have a quantity contract and a price contract, respectively. Finally, by deriving the order of social welfare among the four subgames, we show that the social incentive does not coincide with the private incentive in the robust equilibrium with respect to risk domination in the endogenous selection game of the strategic contracts of the asymmetric duopoly with the firm with a sales delegation and the CSR firm.     

International versus domestic entrepreneurship: New venture strategic behavior and industry structure

International entrepreneurship is defined in this study as the development of international new ventures or start-ups that, from their inception, engage in international business, thus viewing their operating domain as international from the initial stages of the firm's operation.One hundred and eighty-eight new venture firms in the computer and communications equipment manufacturing industries are classified according to the percentage of their sales in the international market. Ventures with no sales derived from international activities are considered “domestic” new ventures, and ventures with sales from international activities comprising greater than 5% of total sales are considered “international” new ventures.The strategy and industry structure profiles of international new ventures are significantly different from domestic new ventures. The internationals pursue much broader market-based strategies, seeking a strategy of broad market coverage through developing and controlling numerous distribution channels, serving numerous customers in diverse market segments, and developing high market or product visibility. The internationals also emphasize a more aggressive entry strategy, building on outside financial and production resources to enter numerous geographical markets on a large scale. Securing patent technology is also an important component of their strategy. This suggests that the internationals compete by entering the industry on a large scale, seeking to penetrate multiple markets, with the recognition that external resources are necessary to support such an entry.Whereas both the domestics and the internationals characterize domestic competition as being relatively intense, the international new ventures compete in industries with higher levels of international competition. It is not clear from this research whether the new venture selects an industry with a high degree of international competition and therefore responds with an international orientation or, because the new venture has an international orientation, it perceives or recognizes a higher degree of international competition. Another industry structure difference is the internationals' perceived higher degree of restrictiveness due to government regulation. It is unclear whether this restrictiveness motivates new ventures to seek less-regulated international environments or if it indicates that when competing internationally, the new venture is confronted with increased regulatory requirements.Domestic new ventures are distinguished by their emphasis on a production expansion strategy and customer specialization strategy. The production specialization strategy consists of focusing on limited geographical markets, maintaining excess capacity, and pursuing forward integration. The customer specialization strategy incorporates the production of a specialty product that is purchased infrequently. Thus, for both of the domestic strategies, a consistent “closeness” between the producer and consumer is implied. This may be an important basis underlining the new venture's decision to compete in an exclusive domestic context.This study offers initial support for the notion of international entrepreneurship by its findings that there are significant differences between new venture firms competing domestically and new ventures choosing to also enter international markets.     

Cross-functional selling teams - The loss of control of the selling function

Selling has become dispersed through the use of selling teams that include members from functional areas other than marketing or sales. This now occurs within many firms utilising key account management strategies, within both business-to-business and business-to-reseller environments. This article is aimed at developing a better understanding of factors affecting ‘team selling’ and its impact on sales performance, with clear benefits to company management.     

Determinants of International Activities: Are SMEs Different?

In this paper we econometrically investigate the factors determining the choice of a specific internationalisation strategy. We distinguish four strategies, ranging from “serving foreign markets through exports only” up to “exporting and locating abroad several business functions such as distribution, production and R & D”. These strategies are evaluated against the reference category “domestic sales only” (multinomial logit model). The analysis, to a large extent, confirms Dunning’s well-known OLI paradigm. O-advantages turn out to be the main drivers of internationalisation, irrespective of firm size and internationalisation strategy. However, the knowledge-base on which O-advantages of smaller firms rests is more narrow than that of large companies. Whereas the former rely, in relative terms, primarily on capabilities related to incremental innovations, the latter draw to a higher extent on assets enabling them to be competitive in terms of far-reaching innovations. L-advantages (wages, regulatory framework, etc.) primarily are relevant in case of small firms; but even for this size class, O-advantages are dominant.     

Sources of opportunities used by growth minded owner managers of small and medium sized enterprises

The purpose of this paper is to investigate the sources and nature of opportunities used by owner-managers of small and medium size (SMEs) firms in order to grow their businesses. In addition to the owner-manager's desire for growth, clearly there needs to be both opportunities to pursue and sufficient management activities that will discover such opportunities, so that a business can grow. These opportunities may originate through some form of environmental change such as advances in technology or by exploiting changes in the marketplace, for example, the exit of a competitor.Research was carried out within twenty SMEs whose owner-manager's aimed to grow their businesses. The focus of the research was on the sources of opportunities they encountered and how and why opportunities were recognized by these firms.The key findings of this research illustrate that the majority of sources for business opportunities for SMEs in this study lie in the market place and are not a direct consequence of environmental change. Traditional marketing analysis tools can, therefore, identify significant sources and scope for growth opportunities for SMEs.     

How may the nature of family firms explain the decisions concerning international diversification?

This study explores how the ownership structure of family firms gives these organizations a distinctive nature in terms of international diversification. We argue that the heterogeneity of family firms may cause variations in the degree of international diversification among these types of businesses. We have studied three factors related to ownership structure: the degree of family ownership and the type and degree of ownership of the second largest shareholder (another family or a financial company). The empirical evidence is provided by a sample of European and Asian family firms (2004–2008). Our results show that the degree of family ownership has a negative impact on the degree of international diversification. However, the presence and ownership share of a financial company as the second largest shareholder in a family firm favor this diversification. This study also reveals the importance of the financial company as a second owner in the preference family firms show for growth in international markets.     

Industry changes in technology and complementary assets and the creation of high-growth firms

This study uses employment data to examine why some industries host more new high-growth firms than others. Using a unique data base of 201 industries over a 15-year period, we find that increases in the proportion of employment of scientists and engineers in industries are positively associated with counts of fast-growing new firms; however, we do not detect a relationship between fluctuations in the proportion of employment in sales and production occupations and counts of fast-growing new firms. The findings suggest that technological innovation is an important determinant of entrepreneurial opportunity. Further, they suggest that private new firms are an important means of organizing commercial innovation and that new firms may be less constrained by complementary assets than has been previously understood.     

国有与民营新闻网站商业模式的差异及其形成机理——基于四个新闻网站的案例研究

商业模式是决定企业战略定位和价值实现的关键架构,但现有文献对于产权性质影响商业模式的研究较少。文章分别选择两家国有和民营新闻网站为案例对象,对比分析两类企业商业模式的共性和差异,深入探讨导致差异的主要因素及其作用机理。研究发现,国有和民营新闻网站都采用了“二次销售”的基本逻辑,但在价值定位、价值创造、价值传递、价值获取方面均存在显著差异,国有网站主要采取以社会效益为核心的权变型商业模式,而民营网站则建立了以娱乐为导向的独占型商业模式。系统分析了制度环境、产权性质、企业资源等导致商业模式差异的主要因素,并构建了商业模式的形成机理模型。最后在综合权衡经济效益和社会效益的基础上提出相应的对策建议。     

The ambitious entrepreneur: High growth strategies of women-owned enterprises

During the last two decades, researchers have sought to develop categories of entrepreneurs and their businesses along a variety of dimensions to better comprehend and analyze the entrepreneurial growth process. Some of this research has focused on differences related to industrial sectors, firm size, the geographical region in which a business is located, the use of high-technology or low-technology, and the life-cycle stage of the firm (i.e., start-up vs. more mature, formalized companies). Researchers have also considered ways in which entrepreneurs can be differentiated from small business managers. One of these classifications is based on the entrepreneur's desire to grow the business rapidly. This is the focus of our study.To date, the media have paid considerable attention to rapidly growing new ventures. However, still lacking are large-scale research studies guided by theory through which we can expand our knowledge of the underlying factors supporting ambitious expansion plans. Some research has identified factors that enhance or reduce the willingness of the entrepreneur to grow the business. Factors include the strategic origin of the business (i.e., the methods and paths through which the firm was founded); previous experience of the founder/owner; and the ability of the entrepreneur to set realistic, measurable goals and to manage conflict effectively.Our study attempted to identify the strategic paths chosen by entrepreneurs and the relation of those paths to the growth orientation of the firm. The entrepreneurs sampled in this study are women entrepreneurs across a wide range of industrial sectors. Recent reviews of entrepreneurship research have suggested the need for more studies comparing high-growth firms with slower-growth firms to better delineate their differences in strategic choices and behaviors.Our study sought to answer the following questions: What characterizes a “high growth-oriented entrepreneur?” Is this distinction associated with specific strategic intentions, prior experience, equity held in previous firms, the type of company structure in place, or success factors the entrepreneur perceives are important to the business? Do “high growth” entrepreneurs show greater entrepreneurial “intensity” (i.e., commitment to the firm's success)? Are they willing to “pay the price” for their own and their firm's success? (i.e., the “opportunity costs” associated with business success and growth). Other relationships under investigation included different patterns of financing the business' start-up and early growth. Do “high-growth” entrepreneurs use unique sources of funding compared with “lower-growth” entrepreneurs?Eight hundred thirty-two entrepreneurs responded to a survey in which they were asked to describe their growth intentions along nineteen strategic dimensions, as well as respond to the foregoing questions. Some of the strategic activity measures included adding a new product or service, expanding operations, selling to a new market, and applying for a loan to expand operations. Actual growth rates based on sales revenues were calculated, and average annualized growth rates of the industrial sectors represented in the sample were obtained. This study showed that high-growth-oriented entrepreneurs were clearly different from low-growth-oriented entrepreneurs along several dimensions. The former were much more likely to select strategies for their firms that permitted greater focus on market expansion and new technologies, to exhibit greater intensity towards business ownership (“my business is the most important activity in my life”), and to be willing to incur greater opportunity costs for the success of their firms (“I would rather own my own business than earn a higher salary while employed by someone else”).The high-growth–oriented entrepreneurs tended to have a more structured approach to organizing their businesses, which suggests a more disciplined perception of managing the firm. In summary, results showed the group of high-growth–oriented entrepreneurs, labeled “ambitious,” as having the following distinctions: strategic intentions that emphasize market growth and technological change, stronger commitment to the success of the business, greater willingness to sacrifice on behalf of the business, earlier planning for the growth of the business, utilization of a team-based form of organization design, concern for reputation and quality, adequate capitalization, strong leadership, and utilization of a wider range of financing sources for the expansion of the venture. The purpose in uncovering these differences is to enable entrepreneurs and researchers to identify more clearly the attributes of rapid-growth ventures and their founders and to move closer to a field-based model of the entrepreneurial growth process which will help delineate the alternative paths to venture growth and organizational change.     

The Turnover of Firms and Industry Growth

In a dynamic setting, every firm can be regarded as a “business experiment” with the objective to search and explore new business opportunities. It is suggested that the growth of an industry is enhanced by new-firm entry, since a positive correlation between the number of successes, i.e. fast-growing firms, and the number of business experiments is to be expected. Exit is necessary to sort out the firms that the market rejects. Hence, it is rather the entry and exit of firms that jointly should have a positive effect on growth, rather than the number of entries in isolation. This paper tests the hypothesis that a high turnover rate of firms has no, or a negative, effect on industry growth. The analysis is based on an extensive data set covering all Swedish IT firms that existed between 1994 and 1998. The turnover rate of firms is found to have a significantly positive effect on industry growth.     

Strategic reference points in family firms

Family firms are classically seen as risk averse organizations, and this is evident in their generally lower R&D investments compared to non-family firms. Recent research, however, challenges this predominant view and suggests that family firms can embrace higher strategic risk when faced with threats to their family-centered goals. Still, the internal and external conditions that drive variations in the strategic risk taking behaviors of family firms are little known and understood. This article adds to this literature by developing and testing a conceptual model of strategic risk taking that incorporates behavioral theory, family business literature, and the logic of the strategic reference point theory. With recognition that the interplay between family and economic goals determines heterogeneity in strategic actions of family firms, this model suggests that family managers respond differentially to the feedback information regarding internal and external reference points, and consequently identifies key drivers of variation in the R&D investment behavior of family firms. By examining the pattern in R&D investments of 437 Spanish private manufacturing firms from 2000 to 2006, this study shows how strategic inputs, strategic outputs, and external benchmarks produce variations in strategic decisions about R&D investments in family and non-family firms. The findings offer insights into how internal and external reference points are considered in family firms’ decision making, thereby contributing a deeper understanding into the circumstances under which family goals cope or collide with the economic goals of the firm, and how this influences strategic risk decisions in family firms.