Chris Graves

Internationalization of Australian Family Businesses: A Managerial Capabilities Perspective

Successful international expansion requires the managerial capabilities necessary to configure and leverage a firms resources in the international marketplace. Because family firms can face unique challenges in building their managerial capabilities, the purpose of this study is to compare the managerial capabilities of family and nonfamily firms according to the degree of their internationalization. Using the most recently available longitudinal database of Australian small-to-medium-sized enterprises, the results of this study indicate that the managerial capabilities of family firms lag behind those of their nonfamily counterparts as they expand internationally, particularly at high levels of internationalization. The implications of the findings for research, policy, and practice are discussed.

Internationalisation of the family business: a longitudinal perspective

Australian family firms make a significant contribution to the Australian and global economy. Despite the fact that the complexities associated with managing a family business are not addressed by classical management theory, limited empirical research has documented the international expansion of family firms. Building upon the stage model theory, the network theory and the organisation capabilities perspective of internationalisation, this study examines whether family firms differ from non-family firms with regard to the propensity for and extent of their internationalisation. The results, arrived at by using the most recently available longitudinal database of Australian businesses, highlight that family firms are less likely to internationalise compared to non-family firms. Although an examination of internationalised firms found that the extent of internationalisation of family firms is less than that of non-family firms, this difference is not persistently significant over time. This suggests that there is no marked difference in the extent of internationalisation of internationalised family and non-family firms. The results also suggest that older and larger firms, committed to innovation, networking and an orientation towards growth, are more likely to internationalise their operations. Finally, compared to non-family firms, family firms are less likely to engage in networking with other businesses, more likely to exhibit growth profiles typical of lifestyle/traditional firms and be smaller in size. The implications of the findings for theory and practice, and opportunities for future research are discussed.

Corporate turnaround and financial distress

Purpose – Drawing on variables cited in the turnaround literature, this study aims to explore whether information contained within annual reports is useful in distinguishing between distressed companies that enact a turnaround and those that fail.Design/methodology/approach – This study develops a discriminant model to identify distressed companies that have turnaround potential.Findings – Analysis of the results reveals that successful turnarounds are associated with the severity of the distressed state, its determinants, with the extent of change in the distressed state since the previous year, and firm size.Originality/value – This article is of use in identifying what information is useful in annual reports.

An Empirical Analysis of the Effect of Internationalization on the Performance of Unlisted Family and Nonfamily Firms in Australia

The purpose of this study is to compare the performance of unlisted family and nonfamily small and medium-sized enterprises (SMFEs and non-SMFEs) and the effect of internationalization on their relative performance. Results of the regression analysis of 4,217 firms with 11,821 observations over a 3-year period found that SMFEs achieved a higher return on assets as a result of having a superior return on sales. Also, although the results indicate that internationalization had a significant negative effect on the return on assets of SMEs overall, this was not the case for SMFEs, and the results suggest that SMFEs perform better in the international marketplace. These results were consistent across different definitions of family business employed. Implications for future research are explored.

The effect of finance, knowledge and empathy gaps on the use of private equity amongst family-owned SMEs

This paper presents the findings of exploratory research into the challenges that small-to-medium-sized family-owned enterprises (SMFEs) face when engaging with the private equity (PE) sector. This study, conducted through interviews of SMFE owners, PE firms and family business professional advisors in South Australia, indicates that there are three large gaps between SMFE owners vis-a-vis the PE community: 1) a finance gap; 2) a knowledge gap; 3) an empathy gap. The results of this study also suggest that these gaps interact with each other to exacerbate the overall gap, and that some professional advisors were found to contribute to (rather than bridge) these gaps. This paper concludes with a revised conceptual framework model for the better understanding of the barriers to and opportunities for SMFEs to gain access to PE and some suggestions as to how professional bodies and trade associations can facilitate the process.

Recruitment challenges in family firms: the effects of message content and type of applicant on organisational attractiveness

Research suggests that family firms face big challenges when recruiting qualified non-family employees. In this paper we explore the effects of information about family ownership and organisational size on perceptions about a firm and attractiveness to a firm. One hundred and eighty seven participants (Undergraduate = 92, MBA students = 95) read one of four job advertisements created by manipulating information about organisational size (50 vs. 500 employees) and family ownership (explicit vs. implicit). Results indicate that explicitly communicating information about family ownership does not make a difference on perceptions about the firm and attractiveness to it. Information about organisational size affects applicant perceptions about job security, advancement opportunities, compensation, prestige, and organisational attractiveness particularly for MBA students. Implications of these results for research recruitment practices in family firms are discussed.

Re‐engineering recruitment to the accounting profession

There can be few personnel techniques so lowly regarded as the recruitment interview. Yet we persevere with the use of the technique despite the overwhelming evidence of its deficiencies. The accountancy and auditing professions are as guilty as most in this regard, and suffer from rates of attrition and job turnover, which should be an embarrassment. But there are alternatives available, and this paper reports on the development of revolutionary techniques which might have a significant impact on recruitment to the accounting and auditing professions in the UK.

Effect of board composition and ownership characteristics on fraud Evidence from Malaysian listed companies

Since the Asian financial crisis in 1997, there has been renewed interest in corporate governance policies and practices. This study focuses on corporate governance practices in Malaysia, where the increasing incidence of fraud suggests a lack of adequate corporate governance systems in Malaysian listed companies. Using an unbalanced data set comprising 200 companies representing a total of 579 firm-year observations, this study examines the effects of internal corporate governance mechanisms on the occurrence of fraud. Specifically, it looks at the effects of board characteristics, ownership structure and quality of audit on the occurrence of fraud in Malaysian listed companies from 2007 to 2009. The findings indicate that the number of board meetings was positively associated with the occurrence of fraud, but both state and foreign ownership revealed a negative correlation, whereas factors including the number of independent directors, board size, CEO duality and the quality of audit had no observable effects.

Family-owned businesses: perspectives on Australian policy

In 2008, a report was commissioned by the European Commission (EC) outlining various policy matters in the field of family business within the auspices of the European Union (EU). Family-owned businesses make a significant contribution to Australias economic and social welfare. The EC report offers a template for examining family business issues relevant to Australia in seven key areas: political awareness, intergenerational business transfer, financial obligations, balancing business and family, lack of specific education, access to finance for growth and maintaining a skilled workforce. We find that Australian family business policy does not differ markedly to that of Europe. Several policy recommendations are outlined to enhance the recognition of, and provide support to, Australian family-owned businesses.