The Role of Inward FDI and Family Firm Heterogeneity on Foreign Location Choice: Evidence from India

The purpose of this study is to examine the internal and external factors that influence the location choice decision of family firms. Drawing on two streams of literature—family firm and international business—we investigate the role that inward FDI (IFDI) and firm’s heterogeneity (ownership structure and management type) play in the location choice of family firms. Our analysis of a large sample of family firms (N = 278) from India suggests that IFDI is positively associated with a greater likelihood of advanced economy location choice compared to the choice of emerging economies. Our results also reveal that the relationship between IFDI and advanced economy location choice is stronger for family-controlled firms than for family-influenced firms. In addition, results demonstrate that within family-controlled firms, the above positive relationship is stronger for firms that are professionally-managed than for firms that are family-managed. The study concludes by explaining the theoretical and managerial implications of the findings and highlighting avenues of future research.