400 Int. J. Entrepreneurial Venturing, Vol. 2, Nos. 3/4, 2010
Copyright © 2010 Inderscience Enterprises Ltd.
Internationalisation of family-owned businesses in
the Czech Republic
Hamid Moini*
University of Wisconsin-Whitewater,
Whitewater, WI 53190, USA
E-mail: moinia@uww.edu
*Corresponding author
Frantisek Kalouda
Masaryk University,
Lipová 507/41a, 602 00,
Brno, The Czech Republic
E-mail: Kalouda@econ.muni.cz
George Tesar
Umeå University,
Sweden and University of Wisconsin-Whitewater,
Whitewater, Wisconsin 53190, USA
E-mail: tesarg@uww.edu
Abstract: This study uses a case-study method through personal interviews
with owners of seven family-owned firms in the Czech Republic in order to
determine factors affecting their internationalisation. We examine four research
questions on factors which have been identified by previous research
to influence internationalisation of family-owned firms. The results
indicate that owners’ motives and size of their companies contribute to
their internationalisation. On the other hand, owners’ background, product
characteristics, and the knowledge of foreign markets are not necessary
conditions for internationalisation of family-owned firms. Finally, the results of
the study appear to show that the pattern of perceptions about export costs and
barriers depends upon the kinds of costs and barriers are being investigated.
Keywords: internationalisation; family-owned business; smaller firms; export;
transition economies; Czech Republic.
Reference to this paper should be made as follows: Moini, H., Kalouda, F. and
Tesar, G. (2010) ‘Internationalisation of family-owned businesses in the Czech
Republic’, Int. J. Entrepreneurial Venturing, Vol. 2, Nos. 3/4, pp.400–418.
Biographical notes: Hamid Moini is a Professor of Finance at the University
of Wisconsin-Whitewater. He received his PhD in Financial Economics and his
MA in Finance from the University of Alabama. His research has focused on
development of global market entry strategies for smaller firms. He has
published numerous articles in internationally recognised refereed journals in
international business and finance and is quoted in major research studies. He is
the past President of the Academy of Finance.
Internationalisation of family-owned businesses in the Czech Republic 401
Frantisek Kalouda is an Assistant Professor of Finance in the Faculty of
Economics and Management at Masaryk University in Brno in the Czech
Republic. He is an active Researcher and an author of several articles and
books. Most of his research effort is focused on current strategic and
operational issues in the Czech Republic’s economy. His research also focuses
on the internationalisation process of smaller Czech Republic enterprises. This
research stream led to an international co-authorship of several case studies that
will be included in an up-coming book on internationalisation of smaller
manufacturing enterprises.
George Tesar is an Emeritus Professor of Marketing and International
Business at Umeå University in Umeå, Sweden and the University of
Wisconsin-Whitewater. He is also an Assigned Professor at Aalborg University
and serves as a Chief Scientific Officer for Social Marketing at the Institute for
Lifestyle Options and Longevity (ILOL) in Prague. He has a Doctorate from
the University of Wisconsin-Madison. He serves on several boards and he is
professionally active as a Consultant training academics, executives, and
managers in technology transfer, internationalisation, and foreign market entry
strategies. He is a Founding Member of the Product Development and
Management Association.
1 Introduction
The globalisation of the world economy has provided a great opportunity for many
family-owned businesses to expand their operations to other markets around the world.
Internationalisation of family-owned businesses is, however, a very challenging task. Due
to their small size these businesses face many impediments when they venture into
foreign markets. For example, certain characteristics of family-owned businesses, such as
concentration of power, and delays or lack of succession plans hamper their efforts to
internationalise.
Using a case study approach this study examines the propensities of family-owned
businesses in the Czech Republic to enter foreign markets. According to Olson and
Gough (2001) previous research has improved our understanding of internationalisation
of family-owned businesses from developed-countries perspectives but it has not received
equal attention from transition-economies perspective. Although this paper does not
discuss the conceptualisation of internationalisation by family-owned businesses, within
its framework, this study has attempted to take into account previous research by
including the variables identified in the literature in order to develop a suitable
framework for internationalisation by family-owned businesses in the Czech Republic.
2 Literature review
Research interest on family-owned businesses has increased considerably over the last
two decades. Researchers from several disciplines (Chrisman et al., 2003; Gallo et al.,
2004) have examined family-owned businesses growth as well as their involvement in
foreign markets. Contributions of these businesses to economic growth through
technological development and expansion into foreign markets have been noted (Heck
and Stafford, 2001; Klein, 2000; Morck and Yeung, 2003; Shanker and Astrachan, 1996).
402 H. Moini et al.
According to Donckels and Frohlich (1991) and Kirchhoff and Kirchhoff (1987),
family-owned businesses account for more than two-thirds of all businesses and make a
major contribution to wealth, competitiveness, and job creation in their countries. It is
estimated that in the USA 40 to 60% of the gross domestic product (GDP) is created by
family-owned businesses (Ward and Aronoff, 1990).
2.1 Owners’ background and motives
Earlier studies dealing with internationalisation of family-owned businesses have
examined the extent that characteristics of owners such as age, education, and knowledge
of foreign languages, are linked to their export activities (Davis and Harveston, 1999).
They argue that the level of internationalisation of first-generation family-owned
businesses run by their founder is directly proportional to the age and education of the
founder and the degree to which he or she invests in technology and uses the internet.
Gallo and Garcia (1996), on the other hand, found that multi-generational family-owned
businesses achieve a higher level of internationalisation and that family-owned firms’
managers find that their reluctance to internationalisation diminishes when there are other
family members to back them up.
Researchers have also identified a variety of motives which are most important in
making a decision to enter export markets. Graves (2008) has identified three key
determinants of the internationalisation pathways taken by family firms. These are:
1 the level of commitment toward internationalisation
2 the financial resources available
3 the ability to commit and use those financial resources to develop the required
capabilities.
Other researchers (Czinkota and Tesar, 1982) have categorised owners/managers motives
either as proactive, (i.e., those that systematically explore possibilities of entering foreign
markets, or reactive, (i.e., those which do not actively explore such opportunities).
Proactive reasons are based on a firm’s internal situation and are firm initiated, while
reactive reasons are based on a firm’s behaviour with respect to the environment and are
in response and adaptation to changes from outside the firm. For example, many studies
(Kaynak et al., 1987; Bilkey and Tesar, 1977) have cited the receipt of an unsolicited
order as the reason for the first export activity of the firm. Others cited the existence of
underutilised production capacity (Brooks and Rosson, 1982), uniqueness of the product
or a technological advantage (Pope, 2002), and competitive domestic market (Rabino,
1980; Bilkey, 1978; Pavord and Bogart, 1975; Alexandrides, 1971) for beginning to
export. Several other studies have also suggested that companies begin to export in
response to environmental changes, such as declining and/or saturated demand in the
home market (Kaynak et al., 1987; Rabino, 1980). In general, firms with proactive
motives become international because they want to while reactive firms become
international because they must.
2.2 Firm’s characteristics
Firm characteristics, including years of business experience, size, age, and ownership
structure are often regarded by researchers as critical factors in explaining the
Internationalisation of family-owned businesses in the Czech Republic 403
internationalisation of family-owned businesses. Gallo and Estapė (1992), for example,
found that family-owned businesses tended to internationalise later and much slower than
non-family businesses. Other studies also found a positive relationship between firm size
and internationalisation. Baird et al. (1994), for example, found that international firms
are larger and tend to be industrial firms rather than retail or service firms. Dhanaraj and
Beamish (2003) confirmed this finding using a sample of Canadian firms. Mittelstaedt et
al. (2003) also found that very small manufacturing firms (companies with fewer than 20
employees) in South Carolina are far less likely to engage in exporting than small firms
with 20 to 500 employees. They concluded these firms simply do not have the resources
(time, money, and personnel) to engage in exporting. In addition, Gallo and Sveen (1991)
found that other factors such as, company’s culture, strategy, and organisational features
may hinder the internationalisation process.
Several studies (Pope, 2002; Sriram et al., 1989; Ganier, 1982) have examined the
extent that the level of technological superiority and R&D intensity of a product were
related to a firm’s internationalisation. They have suggested that small exporters are able
to compete in foreign markets because of their technological capabilities. Cunningham
and Spigel (1971), for example, found the most important factors contributing to a firm’s
successful exporting are the design and quality of the product. Possession of patents and
distribution efficiencies are also seen as effective factors in initiating an export program
(Pavord and Bogart, 1975). According to Tesar (1975), firms offering products with
unique features are more likely to be exporters. Christensen et al. (1987) have reported
that successful exporters generally emphasise quality control and seek unique product
attributes. A study by Kirpalani and Macintosh (1980) relates several marketing variables
to export success and concludes that pricing and promotion are significantly associated
with a firm’s export success.
2.3 Knowledge of foreign markets
Previous research (Anderson, 2006; Kaynak and Kothari, 1984) have contributed the lack
of export activities of smaller businesses to their inability to gather market information,
maintaining a continuous flow of communication with foreign customers, and lack of
experience in planning and targeting export sales in world markets. According to
Atherton and Sear (1997) new market development requires the firm to research the
market, establish a local presence, sell, process and fulfil orders, and ship and deliver.
The most obvious reason companies do not seek to develop new markets is simply their
failure to recognise that new markets exist. This lack of knowledge could be due to either
the lack of an effort to find out what opportunities exist or the lack of an opportunity to
explore new markets (Kroth 1991).
2.4 Costs and barriers of internationalisation
The literature on the internationalisation of firms has identified several costs and barriers
which might serve as potential inhibitors to exporting (Moini, 1997; Wright, 1993).
According to Wright (1993) both personal costs (i.e., stress on family life) and personnel
costs (i.e., hiring new people and paying sales representatives’ commissions) should be
considered before deciding to export. Eshghi (1992) and Yang et al. (1992) concluded
that obtaining the information necessary to enter the export market is one of the biggest
problems faced by would-be exporters. According to Alexandrides (1971) the main area
404 H. Moini et al.
where help was most needed by both exporters and non-exporters was in locating
perspective clients in foreign markets. Similarly, other studies (Naidu and Rao, 1993;
Moini, 1991) have found that both non-exporters and exporters believed that poor
knowledge of potential markets hinders their export activities.
Knowledge and skills about export procedures, documentation, and government
regulations are the other critical requirements for successful foreign market entry by
smaller firms. A US Senate (1982) study has reported that the most noted obstacles to
exporting involved the expense, time, and paperwork required to comply with foreign
regulations. In addition, different product standards and procedures in other nations may
convince many smaller firms that they lack a competitive edge in dealing with foreign
customers (Pope, 2002).
A large body of empirical evidence has also revealed that cultural and language
barriers are obstacles to exporting (Barker and Kaynak, 1992; Mayo, 1991). While Mayo
(1991) suggested that one reason first-time exporters fail to enter foreign markets is their
inability to understand and adapt to foreign cultural and business practices, Naidu and
Rao (1993) have reported no significant differences between exporters and non-exporters
with respect to language and cultural barriers.
Problems caused by financial barriers are also major impediments to
internationalisation of smaller firms (McKendrick et al., 1996; Naidu and Rao, 1993).
Several studies have shown that financing problems, such as getting payments (Tesar and
Tarleton, 1982), honouring letters of credit (Rabino, 1980), dealing with banking
inefficiencies (US Senate, 1982), and inadequate capital (Bilkey, 1978), were obstacles to
exporting. The US Senate (1982) study indicated that more than half of the responding
firms cited practical, everyday business problems such as getting payments, obtaining
credit, and dealing with banking inefficiencies, as obstacles to exporting. In contrast,
other studies have found these financing problems not to be significant barriers (Naidu
and Rao, 1993; Yang et al., 1992; Moini, 1991).
Increasing trade deficits and other economic problems have forced many nations to
develop policies and strategies to encourage non-exporting firms to enter the export field.
Previous studies (Cavusgil and Naor, 1987; Cavusgil, 1983) have shown that smaller
businesses in particular can benefit from export assistance programs. However, Moini
(1998) found that exporters and non-exporters reported a lack of awareness of available
export assistance programs. He found that current export assistance programs are not
reaching their targeted audiences in an effective manner. He concluded that there is a
need for an increase in firms’ commitments to export-related activities, especially in the
first few years when they begin to penetrate foreign markets.
3 Research methodology
This research project uses a case-study method. The choice of a case study method is
theoretically driven. It is a highly valuable qualitative research strategy and has been
applied successfully in previous research on the international efforts of entrepreneurial
firms. Recent studies of the activities of small businesses have demonstrated that case
research has a high exploratory power and allows dynamic decision-making processes to
be more deeply investigated (Rialp-Criado et al., 2003). In particular, the case-based
methodology is applicable to the discovery of the process of developing a foreign market.
Internationalisation of family-owned businesses in the Czech Republic 405
It overcomes some methodological limitations associated with previous research (Aldrich
and Martinez, 2001).
The data collection was carried out through personal interviews with owners at seven
family-owned businesses in the Czech Republic. The participating businesses were
carefully selected in order to represent a broad range of manufacturing and service
sectors. One firm was involved in metal fabricating, one in plastic manufacturing, one in
violin making, two in tourism, one in wine making, and one in architectural design.
During the interviews, questions were asked and notes were taken by the interviewers.
Complete write-ups were prepared on each case company, focusing on the specific
characteristics of each case situation.
This research study assumes that family-owned businesses’ global market entry is
influenced by variables which can be divided into four groups:
1 owners’ background and motives
2 firm’s characteristics
3 knowledge of foreign markets
4 costs and barriers of exporting.
Each of these determinants is, in turn, composed of many subsets of independent
variables. For example, it is assumed that the degree to which a firm will enter into export
activities depends on the owners’ background, which includes a set of variables which
measure owners’ demographics, such as age, education, and knowledge of foreign
languages. In addition, owners’ motives, such as systematically exploring foreign market
entry, focusing on export growth, or obtaining financial services are another set of
variables that measure the extent to which a firm may engage in export activities.
As was indicated in the literature review a firm’s characteristics can influence its
decision to become international or not. These characteristics, for example, are composed
of a set of variables which measures the size of the firm, years of experience, key
decision makers, and the corporate structure.
The next group of variables which affect foreign market entry were related to the
knowledge of target markets. These variables include owners’ knowledge of the top
foreign markets for their products, economic conditions and the level of competition in
those markets, development of a business and marketing plan for targeted markets, and
advertisement in international journals.
The final group of variables includes the costs, barriers to entry, and government
assistance programs that affect exporting, such as financial, cultural, language, political,
logistic, and many others. Government assistance, such as trade leads, overseas trade
missions, export counselling, market plan development, trade and catalogue shows, as
well as trade financing and export tax credits can also help family-owned businesses in
their global market entry. Accordingly, the following questions emerged from the above
and were examined by this study:
Question 1 Are owner’s background and motives affecting internationalisation
decision?
Question 2 Do firm’s and product characteristics have an effect on its decision to
internationalise?
406 H. Moini et al.
Question 3 Is knowledge of foreign markets helpful in internationalisation of the firm?
Question 4 Do costs, barriers to entry, and the government assistance programs affect
family-owned businesses decision to internationalise?
4 Research findings
In this section we cross-analysed the seven case studies in order to identify the
propensities of family-owned firms in the Czech Republic to enter foreign markets, their
owners’ background and motives, corporate characteristics, knowledge of foreign
markets, and identify costs and barriers that impede their entry into foreign markets.
4.1 Are owner’s background and motives affecting internationalisation
decision?
The experience and background of owners and their motives make out important
resources of a firm and are important drivers or facilitators for their foreign market
entries. Reid (1981) has reported that when research is done on exporting, particularly
when small businesses are being investigated, we must pay attention to individual
characteristics and how these affect the processing of export-related information and
influence export behaviour. In this study we made an effort to include businesses that are
not currently exporting in order to get their perceptions of foreign market entry costs.
There are two firms (see Firms 3 and 5 in Table 1) that are not exporting their products at
the present time.
As it is presented in Table 1 the results of this study indicate that owners’ background
is not a necessary condition for foreign market entry. Owners of non-exporting
businesses who participated in this study tend to be relatively younger, not necessarily
less educated and had very little knowledge of foreign languages. However, some of the
exporting firms’ owners are not younger, nor better educated, and do not know more
foreign languages either.
Using Czinkota and Tesar’s (1982) framework owners’ motives were categorised into
proactive and reactive categories. The results presented in Table 1 indicate that the
process of systematically exploring export possibilities was a very important factor in
foreign market entry. Exporting firms in this study put more effort into systematically
searching for export potentials. For example, two of the exporting firms indicated that
they have qualified staff to manage their international expansion; they focus more on
sales growth than profit maximisation; and many have no problem in obtaining financial
services. However, other two exporting firms indicated several problems in obtaining
financial services, such as collection of foreign invoices. In addition, they are willing to
sacrifice short-term profits during the start-up period of internationalisation for sales
growth. Furthermore, exporting firms utilise large percentage of their production
capacity.
Internationalisation of family-owned businesses in the Czech Republic 407
Table 1 Owners’ background and motives
408 H. Moini et al.
On the other hand, non-exporting firms indicated that they were not systematically
exploring such opportunities. But they also concentrated on sales growth; were willing to
sacrifice short-term profits for sales growth; and indicated no problem in obtaining
financial services. From the above observations, we can confirm previous research
findings (Czinkota and Tesar, 1982) that, in general, owners’ motives have an effect on
the Czech family-owned firms’ decision to enter foreign markets or not.
4.2 Do firm’s and product characteristics have an effect on its decision to
internationalise?
Past research has suggested that firm characteristics, including sales volume, number of
employees, and years of experience are critical measures in the small businesses foreign
market entry (Dhanaraj and Beamish, 2003; Mittelstaedt et al., 2003; Christensen, et al.,
1987; Reid, 1982). As presented in Table 2, all participating firms in this study were
small businesses, ranging from 1 to 100 employees. In terms of annual sales, participating
firms reported a sales volume ranging from less than 250,000 Czech korunas to
200,000,000 Czech korunas for the year 2007, and all of the firms in the sample had been
in business for 11 years or more.
In this study we found that exporting firms tend to be larger; they have the larger
number of employees; the most amount of sales in 2007; but are not necessarily the
oldest firms. In general, we can conclude that a firm’s characteristics can have an impact
on the owners’ decision to enter into foreign markets or not. These results confirm
findings from previous research (Dhanaraj and Beamish, 2003; Mittelstaedt et al., 2003;
Reid, 1982) which found that firms’ characteristics, such as size, years of business
experience, etc., have significant association with export involvement.
Product characteristics, such as the level of technological superiority and R&D
intensity of a product, have been identified as a key variable in small businesses foreign
market entry (Pope, 2002; Sriram et al., 1989; Ganier, 1982; Cavusgil and Nevin, 1981).
However, an important characteristic of many past research projects is the treatment of
the subject firms in the studies where all were treated as homogeneous, despite most
studies included two or more types of industries in their sample. In those cases where
there was some differentiation of industries, researchers generally found that there were
differences in export behaviour (Cannon and Willis, 1983; Ganier, 1982).
The results, presented in Table 2 confirm findings reported by Cannon and Willis
(1983) and Ganier (1982). These results indicate that while only all of the exporting firms
characterise their products as unique, only one of the non-exporting firms believes its
products are unique. While, only one of the respondents believed his products require
training and modification to international standards, several offered after-sale support.
None of the products required alteration in packaging for international sales. This was
more common among products targeted towards consumers.
Respondents also discussed who the end users of their product were. While five of the
firms sold to consumers and businesses, two firms were targeting governments and
manufacturers as their end users. All responding firms believed they have a price
competitive advantage over their foreign counterparts. However, there was no consensus
on the profitability of the international sales. The interesting finding was that both
non-exporting firms believe foreign sales were more profitable. Owners of non-exporting
firms had great reservation on the credit terms of their transactions. They both indicated
they would only consider prepayment for all their transactions. The executives from
exporting firms, though, had some bad experience in collecting payments from their
foreign customers, were willing to consider payment terms between 30 to 90 days.
Internationalisation of family-owned businesses in the Czech Republic 409
Table 2 Firms’ characteristics
410 H. Moini et al.
Table 2 Firms’ characteristics (continued)
Internationalisation of family-owned businesses in the Czech Republic 411
Table 3 Foreign market information
412 H. Moini et al.
4.3 Is knowledge of foreign markets helpful in internationalisation of the firm?
The most obvious reason smaller firms do not seek foreign market entry is simply their
failure to recognise that new markets exist. The results presented in Table 3 suggest that
most of the participating firms know the top foreign markets for their products.
Generally, family-owned businesses in the Czech Republic are targeting the neighbouring
countries, such as Slovakia, Germany, and Austria. This is consistent with previous
studies (Glas et al., 1999) which found that small firms generally start their foreign
market entry by exporting to their neighbouring countries first before venturing to distant
nations. Participating owners also believe that the economic conditions in those targeted
markets are favourable to selling their products and most of them had some sense of
international competition. However, only one firm has developed any business plan for
the targeted markets, and believed their business require agents in overseas markets.
Furthermore, none of them have advertised in international journals in the past. Also,
several of the participating firms have no idea what the level of import duty was for their
products in each of overseas target market.
4.4 Do costs, barriers to entry, and government assistance programs affect
family-owned businesses decision to internationalise?
Although research literature on this topic suggests that smaller firms have the capacity to
export, many appear not to fully maximise their potential gains from exporting. The
results presented in Table 4 indicate that only two exporting firms were proactive in their
approach to foreign markets. They have a person or department devoted exclusively to
building export sales. The other three exporting firms were reactive. These firms do not
have a specific export program but respond to export opportunities if they arise. The
non-exporting firms in the study were also reactive. Both indicated that their firms would
respond to such opportunities but is not actively seeking opportunities in foreign markets.
The riskiest adventure occurs when a company is not totally committed to
internationalisation. Successful exporting requires a well-thought out strategy and
commitment of human and financial resources. All currently exporting firms in the study
have indicated they plan to increase their human and financial commitments to exporting
in the future. On the other hand, the non-exporting firms have no such plans.
The major challenges to exporting firms in the study were financial, foreign
marketing practices, locating prospective clients/customers, and ethical and cultural
differences. Similarly, conforming to foreign regulations was other obstacle for Czech
family-owned businesses wanting to sell their products in foreign markets. Non-exporters
have more difficulty in adapting to foreign ethical practices and languages than exporters.
For Czech family-owned firms to thrive in international markets, they must be ready to
venture out to every potential market even those with different cultures and languages.
Ability to communicate with clients overseas and knowledge of different cultures are
antecedents of attitudes toward exporting. From these results one can conclude that
non-exporting firms suffer from lack of knowledge, skills, and commitment of resources
that are essential for a successful foreign market entry. These are mainly internal factors
and are certainly within the control of management. However, international trade requires
a unique range of knowledge and skills. Most of smaller firms not already active in
international trade are very deficient in these areas. Half-hearted efforts in acquiring the
knowledge and skill make the process to successful exporting both slow and difficult.
Thus, companies must encourage their management to gain the knowledge and skills
needed for exporting.
Internationalisation of family-owned businesses in the Czech Republic 413
Table 4 Export costs, barriers and government assistance
414 H. Moini et al.
Interestingly, government promotion programs can be particularly helpful when
family-owned businesses become aware of export opportunities but need additional
technical assistance to consummate an export sale. Creating good personal contacts with
export markets is important. Frequent visits to foreign markets and attending trade shows
are absolutely critical in developing the export markets. Participating firms in this study
indicated that the Czech government hardly provides any such assistance for smaller
firms in the country. However, some of the exporting firms have stated that any support
such as help with participating in trade shows, assistance with trade lead, export
counselling, and exporting financing can be very useful to them.
5 Summary and conclusions
This study attempts to shed some light on the foreign market entry of family-owned
businesses in the Czech Republic. It examined four research questions on factors which
have been identified by previous research to influence smaller firms foreign market entry.
First we examined the owners’ background and motives. The general findings presented
in the previous section concluded that owners’ background, such as age, education, and
knowledge of foreign languages did not contribute to their decision to enter foreign
markets or not. These findings are in contrast to the earlier studies (Moini, 1998; Reid,
1981) which reported that executives at regular exporting firms have a higher level of
education. These contradictory findings might be due to the small number of cases
examined in this study. In terms of owners’ motives, this study confirmed that exporting
family-owned businesses were more motivated, but were not necessarily utilising a larger
percentage of their production capacity and did not have fewer problems in obtaining
financial services than non-exporting firms.
Second, we examined firms’ characteristics. Study’s findings concluded that
exporting family-owned businesses in the Czech Republic tend to be larger than their
non-exporting counterparts. They have more employees and a larger sales volume than
non-exporting family-owned businesses. We also examined the product characteristics of
the participating firms. These characteristics included uniqueness of products; price
competitiveness; end-users; required training and after-sale support; and modifications to
meet international standards and packaging requirements. From responses to our
interview questions it seemed both exporters and non-exporters treated international sales
as they would any other domestic business opportunity.
Third, the knowledge of top international markets as a critical factor in the
family-owned businesses foreign market entry was examined. In general, family-owned
businesses in the Czech Republic named their neighbouring countries as their top
international markets and all thought that foreign markets were favourable for their
products. They were also aware of both domestic and foreign competition. However, only
one firm has developed any international business market plan.
Finally, costs and barriers to exporting and government assistance programs were
examined. The major challenges to international business efforts of exporting firms in the
study were:
1 financial challenges
2 ethical and cultural differences
Internationalisation of family-owned businesses in the Czech Republic 415
3 conforming to foreign regulations
4 locating prospective clients/customers.
Overall, the results appear to show that the pattern of perception about export costs and
barriers depended upon the kinds of barriers being investigated. Exporters, for example,
attached more importance to barriers that were largely beyond their control (financial
barriers and ethical differences). These barriers cannot be overcome by a firm’s internal
action or education. On the other hand, non-exporters viewed barriers such as:
1 language
2 locating prospective clients as more menacing than exporters.
These obstacles can be overcome by internal actions of the firms.
Although all of participating firms were unaware of any government support for their
international Endeavour, they believed any support such as help with participating in
trade shows, assistance with trade and catalogue shows, and exporting financing could be
very useful to them. We also found that two of the exporting firms interviewed were
actively search foreign market opportunities by assigning a person or department whose
duties included building export sales. The other three exporting firms were reactive. In
addition, most of the exporters expected to increase their human and financial resources
commitment to exporting in coming years.
6 Implications
The results of this research have several direct implications for two different set of actors.
First, government policy makers in the Czech Republic need to understand the necessary
linkages between their family-owned businesses foreign market entry and the country’s
future economic growth. For the Czech Republic to improve its economic status in the
European Union it must support its smaller firms so that they are more competitive in the
global marketplace. As our participating owners indicated, the Czech government
provides hardly any support to its smaller firms at the present time. However, if the
Czech government has such programs, participating owners were unaware of them.
Under such circumstances, the effectiveness of those programs is questionable. Although
there is no guarantee that the existence of such government programs will lead to
successful exporting by family-owned businesses in the Czech Republic, many studies in
other countries have concluded that the use of government export assistance can
contribute to a successful export development strategy (Cavusgil, 1983). Thus, if the
Czech government wants to improve economic conditions in the country by increasing in
the level of Czech exports, it needs to create an effective program that educates owners of
non-exporting firms on the opportunities that are available overseas and alleviates their
fear of exporting.
Second, owners of small family-owned businesses in the Czech Republic must also
realise that doing business in foreign markets has become a matter of survival and not a
choice. Furthermore, exporting owners should recognise that exporting activity is not a
short-term strategy, to compensate for slow domestic demand, but rather a long-term one.
They need a marketing mix which is more strategic than tactical in nature, i.e., selecting
overseas distributors and product adaptation. These strategies require a substantial
416 H. Moini et al.
resource commitment on the part of a firm which many may not be able to make. This is
especially true in the Czech Republic in which, under the communist regime in the past,
international business decisions were made by government ministries, and thus most of
the new executives lack the experience and knowledge of trading in a global market
place. These executives must overcome these shortcomings quickly. Otherwise, they will
fall even further behind. From the results in Table 4, it is clear that issues such as
financial barriers, ethical and cultural differences, foreign market practices, and locating
prospective clients are considered to be the greatest challenges to exporting firms in the
Czech Republic. Unfortunately, these factors are external to the firms and require support
from the government and domestic financial institutions. However, it seems natural for
firms with no export experience, who may perceive exporting as a short-term strategy in
designing and implementing their marketing strategy, to be more concerned about
barriers such as language which could be overcome by a firm’s internal actions.
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