International diversification of family-dominant firms: Integrating socioemotional wealth and behavioral theory of the firm

Drawing on the behavioral theory of the firm, we shed light on an extant debate about whether family firms are more or less likely to diversify internationally. In an analysis of firm-level data from 93 countries over 2011-2018, we find that family-dominant firms-with their established preference for low breadth-high depth international diversification-will seek to increase their breadth when performance falls below aspiration level, but that doing so can hurt their performance stability. Our study advances the literature by identifying important boundary conditions to their prioritization of socioemotional wealth and micro-foundational mechanisms that underlie strategic change in family-dominant firms.