Family Owned Business Institute

Research Scholar's Abstracts 2004 - Harinder Singh

Do Agency Costs Inhibit Foreign Collaborations by Family Firms? An Empirical Investigation
Harinder Singh
2004

The International Business literature indicates that weighing the pros and cons of an international collaboration can be quite complicated. (Kosaka, 2002).Developing an international collaboration merely based on wages and productivity may not be adequate. Issues such as the quality of infrastructure in the host country, connectivity cost, training costs, transportation costs, and raw material availability have to be evaluated. Weighing the relative risks of foreign investment has to be part of the analysis.

Moreover, the potential for foreign collaboration and also establishing a marketing opportunity overseas has to be considered simultaneously.However, a family owned business may not evaluate these global opportunities adequately due to several agency concerns. Family firms may have serious concerns about control, coordination and accountability that could potentially inhibit international collaborations. This project will investigate whether these agency cost concerns impede international collaborations.