Family involvement and Spanish hotel chains’ entry modes abroad

ABSTRACT

The aim of this study is to analyze the relationship between family involvement and entry mode choice by Spanish hotel chains in foreign markets. Drawing on stewardship and institutional theories, we examine how family character may moderate the effect of institutional differences on the choice of entry modes entailing different levels of resource commitment and control over international activities. Using a sample of 981 hotels established abroad by 76 Spanish hotel chains, the results show that family involvement is associated with entry modes involving greater control and resource commitment. Moreover, family involvement moderates the relationship between both formal and informal institutional distance and entry mode choice. Specifically, when both distances are high, family involvement increases the likelihood of choosing entry modes involving higher control and resource commitment.

KEYWORDS:

• Hotel chains
• family firms
• foreign market entry mode
• formal institutional distance
• cultural distance

Disclosure statement

No potential conflict of interest was reported by the authors.

ORCID

Rosario Andreu http://orcid.org/0000-0003-1912-9181

Diego Quer http://orcid.org/0000-0002-5814-6411

Notes

1 Lack of data prevented us from distinguishing between partially-owned (joint-venture) and wholly-owned hotels.

2 According to Gómez-Mejía et al. (2010), a firm is considered a FB if both of the following conditions are met: two or more managers must have a family relationship and family members must hold at least a 10% of the firm’s capital stock.

3 Regarding intangible resources, it could be expected that the larger the number of intangible assets in a hotel, the greater the control that a hotel chain needs to exert in order to meet quality standards. Intangible assets grow as the number of stars increases (Brown & Dev, 2000). As for geographic scope, prior studies used it as a proxy of international experience, suggesting that it could also affect entry mode choice (Lu & Beamish, 2004; Tallman & Li, 1996). More precisely, a greater geographic scope, namely, a higher international experience, will increase the likelihood of choosing equity-based entry modes (Agarwal & Ramaswami, 1992; Contractor & Kundu, 1998).