Family Ownership and the International Involvement of Taiwan's High-Technology Firms: The Moderating Effect of High-Discretion Organizational Slack

Abstract

This study examined the combined effect of family ownership and high-discretion organizational slack on the international involvement of Taiwanese firms. Employing a sample of 179 publicly listed high-tech firms in Taiwan over a period of 6years (2000-2005), we found that firms with high levels of international involvement, that is, a higher degree of internationalization, (i) were not closely held, and (ii) were not excessively controlled by the family. Further, high-discretion organizational slack (indicated by resources that can be deployed in a flexible fashion such as in cash and receivables) moderated the negative relationship between family control and international involvement. This relationship is stronger with a higher level of high-discretion slack. The results support the hypothesis that family control and high-discretion organizational slack negatively influence the decision to internationalize. © 2011 The International Association for Chinese Management Research.