Second-generation's international experience effect on family businesses global expansion

Keywords: family business, second-generation manager, international experience, foreign direct investment, agency problem

Abstract: Family firms are typically reluctant in international expansion due to their strong home market ties, strong concern on family control and lack of external expertise and capital. Does international experience of second-generation managers help to reduce such reluctance? Carrying knowledge of doing business abroad, second-generation managers with international experience may mitigate agency problems caused by information asymmetry when family firms expand abroad. Therefore, second-generation’s international experience may facilitate family firms to go abroad. Data on publicly listed Chinese family businesses supported the above arguments.