The impact of ownership structure on internationalization: An empirical study of Korean SMEs

Abstract

Family ownership has emerged as one of the most crucial determinants of corporate strategy in small and medium-sized enterprises (SMEs). Nevertheless, few studies examine the impact of family ownership and corporate governance on the internationalization of SMEs. We apply the resource dependency theory and agency theory to investigate the impact of family ownership and the moderating impact of institutional ownership on SME internationalization. Using 232 samples of Korean internationalizing SMEs from 2003 to 2013, we find a positive relationship between family ownership and internationalization indicating that the latter may be encouraged by family ownership. Institutional ownership acts as a moderator in the relationship between family ownership and internationalization, implying that internationalizing SMEs with high family ownership tend to internationalize as institutional ownership rises. An important implication for SMEs that depend on international expansion to remain competitive is the crucial need to establish long-lasting relationships with institutional investors, especially in South Korea.