This brief is part of the Insights @ Center for Emerging Markets, a publication focused on cutting-edge ideas and advice for global leaders about emerging markets.

By Elitsa R. Banalieva (Northeastern University), Kimberly A. Eddleston (Northeastern University), Joy Ruihia Jiang (Oakland University), and Michael D. Santoro (Lehigh University)

The “mixed gamble perspective” likens a company's decision to invest in internationalization to a form of hedging of its bets. This approach entails initially sacrificing certain local investments in exchange for potential gains in international markets. Should this gamble succeed, the benefits can enhance the company's family legacy far beyond what might have been achieved without taking the risk. 

Domestic policy changes, particularly those that reduce trade liberalization, significantly influence family firms' international trade engagement. Prior research has not extensively considered the interplay between such policy shifts, the mixed gamble perspective, and family-owned companies. For instance, incremental reversals in market reforms can signal a government's lack of commitment to long-term liberalization, prompting family firms to retract from international trade to protect their wealth and legacy. 

In their analysis of 194 publicly listed, non-state-owned Chinese companies across 24 provinces, Banalieva and colleagues observed that rapid implementation of pro-market reforms was associated with increased internationalization. Conversely, quick reversals had a deleterious effect on international expansion. The presence of family involvement, however, made family-owned companies more resilient in the face of such reversals, enabling firms to sustain their international presence, despite regulatory headwinds. 

Family-Owned Companies' Distinctive Approach to Internationalization 

Family firms are distinctive for their strong sense of pride and community connection, shared goals among family members, and the desire to build a lasting legacy. However, internationalization introduces significant risks, such as the complexities of operating across multiple jurisdictions and adhering to diverse regulations—a task made even more challenging by fluctuating political climates, like the recent trend toward de-globalization. Missteps in international markets can dramatically impact not only the business but also the family's reputation and legacy. 

Wanxiang Group is a prominent example of a Chinese family-owned company. Founded in 1969 by Lu Guanqiu, Wanxiang started as a small agricultural machinery repair shop and has grown into one of the largest automotive components manufacturers in China, with a significant international presence. Despite the founder's passing, the company continues to be family-run, with the appointment of Lu's son, Lu Weiding, as CEO in 2017. Wanxiang Group diversified its business by investing in areas such as renewable energy and electric vehicles and by establishing subsidiaries in the United States, Europe, and Latin America. 

Family-owned companies, in particular, face conflicting motivations with regard to global trade. Their commitment to local markets and building family legacies might make them initially hesitant to invest outside of their established markets, while their long-term, sometimes multi-generational, outlook and patience can be crucial to international success. Unlike non-family companies, these businesses often prioritize non-financial objectives, inclining them to maintain global market involvement even when pro-market reforms falter. 

Managerial Implications  

These findings contribute to the understanding of how family firms navigate international markets and respond to changing regulatory environments. They also emphasize the need for policymakers to consider the specific needs and characteristics of family companies when designing and implementing pro-market reforms, ensuring effective support and clear communication to foster continued growth and development in the global marketplace. As such, policymakers play a critical role in supporting local companies' global ventures through careful planning and communication of their commitment to pro-market reforms. 

Original Work

Banalieva, E. R., Eddleston, K. A., Jiang, J. R., & Santoro, M. D. 2022. Raising or folding the bet? Institutional dynamics, family involvement, and the mixed gamble of internationalization. Thunderbird International Business Review, 64(4), 301-315. 


If you are interested in learning more about this work, contact Professor Elitsa Banalieva at