The asymmetric effect of institutional distance on international location: family versus nonfamily firms Articles uri icon

publication date

  • February 2018

start page

  • 22

end page

  • 45

issue

  • 1

volume

  • 8

international standard serial number (ISSN)

  • 2042-5805

abstract

  • This study examines international location choice by considering the potential effects of institutional distance on the decision comparing family and nonfamily firms. We argue that the magnitude and direction of institutional distance matter and that institutional distance has an asymmetric effect on location choice. However, we argue that family involvement has a moderating effect on this relationship because family firms manage institutional distance differently than nonfamily counterparts. Our results, using a sample of Italian firms (2000-2013), reveal that firms are more likely to choose locations for which the positive institutional distance is greater. Additionally, when compared to nonfamily firms, family firms are more likely to choose locations with greater negative institutional distance and less likely to enter countries with greater positive institutional distance.

keywords

  • asymmetry of distance; family firms; family-managed firms; institutional distance; international location choice