The relations between governance and the internationalisation of SMEs: evidence from medium-sized Austrian firms

Corporate governance plays a crucial role in shaping a firm's strategy, including its international activity. However, the relations between governance and internationalisation have received limited scientific attention. Focusing on governance variables related to ownership, management and boards, this paper explores how the ownership-related factors 'group affiliation' and 'family influence' as well as the firm's governance bodies (management board, supervisory and advisory boards) impact internationalisation. Basing research efforts on medium-sized Austrian firms and drawing on bivariate and multivariate analyses, this paper investigates these relations in a country with a two-tier system. The findings suggest that companies belonging to a business group are more likely to operate internationally. Moreover, there seems to exist an inverted U-shaped relationship between family influence and internationalisation. Also, the firms analysed in this study do not make use of the pool of resources, offered by managing directors, to facilitate internationalisation. While our study reveals a negative correlation between international activity and supervisory boards, firms with an advisory board are more likely to engage in international activities. This finding indicates that business groups and advisory boards are best suited to provide medium-sized enterprises with the capabilities, know-how, networks and other resources necessary to operate internationally.