Lawrence D. Fredendall, Peter Letmathe and Nadine Uebe-Emden
The purpose of this paper is to investigate the strategy used by German Mittelstand companies to achieve a profitable business in China. It explores how those firms seek to reduce…
Abstract
Purpose
The purpose of this paper is to investigate the strategy used by German Mittelstand companies to achieve a profitable business in China. It explores how those firms seek to reduce their risk of entry into this market.
Design/methodology/approach
Survey data were gathered over the phone from individuals in the companies who were identified as knowledgeable contacts. Their responses were then analyzed using descriptive statistics and structural equation modeling.
Findings
German Mittelstand firms that hire Chinese nationals in China obtain market knowledge and a higher return on investment than others. German managers’ efforts to understand the Chinese cultural norms increased the firm’s unwillingness to share information with others. This was probably because their concern about protecting their competitive secrets increased, so they shared less information with suppliers, which decreased their return on investment.
Research limitations/implications
First, the small sample size limited the analysis. Second, there was low inter-rater reliability on multiple items, so these responses could not be analyzed. There is a need to further validate the survey, and obtain a larger sample to analyze alternative models.
Practical implications
This suggests to the practitioner that while it may be relatively easy to start a manufacturing business in China, it requires great effort to manage their risk of losing corporate secrets to their competitors in China.
Originality/value
This paper provides a unique set of data from practicing managers about the risks and gains from doing business in China. This data can be of use to both researchers and to practitioners and it provides a foundation to examine how the risk of losing proprietary knowledge to Chinese competitors affects business.
Details
Keywords
Nadine Schlömer-Laufen and Andreas Rauch
Despite much progress in the field of family business research, there is still no unequivocal quantitative evidence on how many family businesses are generally transferred within…
Abstract
Purpose
Despite much progress in the field of family business research, there is still no unequivocal quantitative evidence on how many family businesses are generally transferred within the family and how many are sold to nonfamily members. Accordingly, the purpose of our paper is to overcome this data problem and to try to get a better estimate of these rates.
Design/methodology/approach
To determine a better estimate of intrafamily successions in Germany, we conducted a meta-analysis of 33 samples from 27 studies covering 75,522 firms facing or having already faced a business transfer.
Findings
Our results indicate that 62% of these family firms are (planned to be) transferred to family members. This type of industry strongly determines the mode of succession. However, methodological issues like study quality and sample design also influence estimated succession rates.
Practical implications
Policymakers need robust statistics so they can base their actions and economic policies on reliable information. However, in the absence of official statistics – as in the case of family firms handing over their company within or outside the family – information is difficult to generate. Our findings provide a generalizable estimate of prevalence rates, providing German policymakers, and those in other countries when applying these methods, with useful information.
Originality/value
This paper suggests that a theory of family firm succession needs to consider more deeply the context in which succession decisions occur. By exploring variables affecting succession rates such as firm size and industry but also methodological issues like sample design and study quality, our analysis also provides a better understanding of central determinants of successions within and outside the family.