The internationalization of family SME: An organizational learning and knowledge development perspective

Purpose – Due to its specificities, the family Small and Medium Enterprise shows a particular behavior as for the creation, development, sharing, protection and transmission of knowledge. The purpose of this paper is to study the specificities of the processes of knowledge creation and development in family firms. Three variables should influence the processes of knowledge development. The characteristics underlined by the literature as being specific to the small and medium-sized family firms are conservatism, independence orientation and social networking. We study particularly the influence of these characteristics on the development of the knowledge base in a context of internationalization. We conceive internationalization as a process of organizational learning and knowledge development (Eriksson and ali., 2000). Johansson and Vahlne (1977) studied market knowledge composed of objective knowledge, on the one hand, and experiential knowledge, on the other hand. Whereas market knowledge refers primarily to relevant information relating to markets and allowing the penetration, the establishment and the exploitation, internationalization knowledge is the competence accumulated by the firm, knowledge carried by the women and men who manage and take part in international activities. Indeed, international expansion of firms does not depend on the only knowledge relating to a specific market but on various aspects of knowledge relating to the international activity. Eriksson and ali. (1997, 2000) analyze thoroughly the different dimensions of knowledge in the context of internationalization. In addition to operational and institutional knowledge, internationalization knowledge is crucial. Autio and ali. (2000) explain the rapid international growth of entrepreneurial firms by the high international knowledge. Because it is difficult to obtain and reproduce, Knight and Liesch (2002) argue that tacit internationalization knowledge provides a competitive advantage for the internationalizing firm. H1: Internationalization knowledge positively influences the degree of internationalization of the firm. Internationalizing implies the beginning of a new activity (new markets, new customers, new competitors, etc.) weakly connected to the original activity (Gallo and Sveen, 1991). So that internationalization starts, a motivation for change, for strategic revival and adaptation to the new requirements of the environment are necessary. However, the usual conservative attitude of the family business can inhibit such a change. The literature suggests that the family system attempts to create and maintain a cohesiveness that supports the family "paradigm" which is described as the core assumptions, beliefs, and convictions that the family holds in relation to its environment. Information that is not consistent with this paradigm is resisted or ignored (Davis, 1983). The more the family is conservative the less it works for change. As a consequence, the level of internationalization knowledge would be weak. More quantitatively the family firm would exhibit a weak degree of internationalization. H2: Conservatism negatively influences the level of internationalization knowledge. The independence orientation is a consequence of the family long-term commitment to the business. Paradoxically, this commitment has two contradictory effects on growth. First, it ha l-0 04 65 86 3, v er si on 1 22 M ar 2 01 0 Author manuscript, published in "Baltic Journal of Management 2, 2 (2007) 154-180" DOI : 10.1108/17465260710750973