Listing pathway, industry competition and internationalization: the case of Chinese family firms

The question of whether family firms (FFs) perform differently in internationalizing is still somewhat unclear. As FFs’ growth trajectories may affect the owners’ perceptions and expectations, this paper explores whether FFs’ listing pathways on financial markets help to explain their moves to internationalize. It is proposed that FFs pursuing backdoor listings differ from those that pursue direct initial public offerings (IPOs) in terms of internationalization because of the different extent of dysfunction caused by their bifurcation bias. The dysfunction is further amplified by industry competition as this introduces greater uncertainties and higher needs for reliance on nonfamily assets. Based on a panel sample of listed Chinese FFs, this research finds that FFs pursuing backdoor listings have a lower level of internationalization than FFs pursuing direct IPOs, and this difference is strengthened by industry competition. Overall, this study contributes to the debates on FFs’ internationalization by unveiling that their listing pathways constitute an important heterogeneity among FFs. It also supplements the international business (IB) literature with micro-foundation determinants of FFs’ internationalization based on the bifurcation bias perspective while highlighting industry competition as a critical boundary condition.