Board openness and family firm internationalization: a social capital perspective.

Building upon social capital theory, this study investigates to what extent board openness to non-family directors affects family firm internationalization. We suggest that board compositions relate to different levels of bonding (internal) and bridging (external) social capital, which affect firm internationalization. In particular, we hypothesize a curvilinear relationship between the percentage of non-family directors in the board and FDI geographic scope. Moreover, we argue that firm age moderates the main relationship. Our analysis of a panel dataset of 7,707 family firms suggests a balanced juxtaposition of family and non-family directors in more mature firms is detrimental for FDI geographic scope. Moreover, our results show that, except for young family firms, broader FDI geographic scope emerges when the board is dominated by one homogeneous type (either family or non-family directors); however, boards dominated by non-family directors always lead to higher FDI geographic scope. We offer important theoretical insights to research on family firm internationalization, social capital, and corporate governance as well as managerial implications. Plain English Summary: The presence of both family and non-family members in the board is a double-edged sword. Drawing on social capital theory, we advance that there is a curvilinear relationship between the presence of non-family directors in the board and family firm internationalization. In addition, we study the moderating role of firm age. Our results show that, in mature firms, boards in which there is a balanced juxtaposition of family and non-family directors lead to lower FDI geographic scope. Therefore—except for young firms—it is more functional for internationalization to rely entirely on external board members or to have a board dominated by family members. For young firms, the relationship between the family board ratio and the FDI geographic scope is more negatively linearly related rather than curvilinear, with the lowest level of internationalization occurring when the board is dominated by family members. [ABSTRACT FROM AUTHOR]