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FUNDAÇÃO GETULIO VARGAS ESCOLA DE ADMINISTRAÇÃO DE EMPRESAS DE SÃO PAULO BIANCA MAGNANI TAVARES THE FAMILY ROLE ON THE INTERNATIONALIZATION PROCESS OF FAMILY BUSINESSES: A TWO-CASE STUDY SÃO PAULO 2012 THE FAMILY ROLE ON THE INTERNATIONALIZATION PROCESS OF FAMILY BUSINESSES 2 BIANCA MAGNANI TAVARES THE FAMILY ROLE ON THE INTERNATIONALIZATION PROCESS OF FAMIL BUSINESSES: A TWO-CASE STUDY Dissertação apresentada à Escola de Administração de Empresas de São Paulo da Fundação Getúlio Vargas como requisito para obtenção do título de Mestre em Gestão Internacional Campo do conhecimento: Gestão Internacional Orientador: Prof. Dr. Luís Henrique Pereira SÃO PAULO 2012 THE FAMILY ROLE ON THE INTERNATIONALIZATION PROCESS OF FAMILY BUSINESSES 3 Tavares, Bianca Magnani. The family role on the internationalization process of family businesses: a two-case study / Bianca Magnani Tavares. - 2012. 172f. Orientador: Luís Henrique Pereira. Dissertação (MPGI) - Escola de Administração de Empresas de São Paulo. 1. Empresas familiares - Brasil. 2. Empresas familiares – Estudo de casos. 3. Globalização. 4. Empresas agrícolas – Brasil – Estudos de casos.. I. Pereira, Luís Henrique. II. Dissertação (MPGI) - Escola de Administração de Empresas de São Paulo. III. Título. CDU 334.722.24(81) THE FAMILY ROLE ON THE INTERNATIONALIZATION PROCESS OF FAMILY BUSINESSES 4 BIANCA MAGNANI TAVARES THE FAMILY ROLE ON THE INTERNATIONALIZATION PROCESS OF FAMIL BUSINESSES: A TWO-CASE STUDY Dissertação apresentada à Escola de Administração de Empresas de São Paulo da Fundação Getúlio Vargas como requisito para obtenção do título de Mestre em Gestão Internacional Campo do conhecimento: Gestão Internacional Orientador: Prof. Dr. Luís Henrique Pereira Data de aprovação: 07/02/2012 Banca Examinadora: Prof. Dr. Luís Henrique Pereira (Orientador) FGV-EAESP Prof. Luciano Thomé e Castro FGV-EAESP Prof. Nadia Wacila Hanania Vianna Universidade Paulista - UNIP THE FAMILY ROLE ON THE INTERNATIONALIZATION PROCESS OF FAMILY BUSINESSES 5 ACKNOWLEDGEMENTS This thesis‟ presentation is very important since it represents the end of a very important phase of my life; the end of CEMS program and therefore my masters. A period which I learned a lot, met incredible people and had several different life experiences. It is always a challenge to remember and thank all the people that somehow were part of this journey or inspired me in all the possible ways. Although I will try: I want to thank my Mom, Dad and Carolina, my sister that were always there, supporting me in my decisions and unconditional help in all the different ways possible, teaching me that being part of a family also means to be part of a team. I also want to thank my extended family; grandmothers, uncles and aunties that were supporting and giving me incentive to carry on. Special thanks to all my friends for the patience and for the help in understanding that everything I had to gave up or do this past year I was studying was for a good reason. I want also to thank all the people that I met throughout this past two and a half years, people from all the parts of the world that are somehow a part of who I am today. Moreover, I would like to thank the people who helped me with the interviews or any kind of info that is now a part of my work: Prof. Luciano Thomé, Gabriela Hage, Renato Magnani. I would also like to thank the Prof. Luciano Thomé and Prof. Nadia Vianna for the dedication on reading my dissertation and for the valuable inputs given in my final exam. Finally, I want to thank FGV and CEMS for all the help given; to Prof. Luis Henrique Pereira for the patience, support and guidance throughout this past year and special thanks to Prof. Tales Andreassi, Prof. Mario Aquino Alves, Prof. Julia Pacheco and Maria Cecília Menezes for their everlasting support. THE FAMILY ROLE ON THE INTERNATIONALIZATION PROCESS OF FAMILY BUSINESSES 6 ABSTRACT This dissertation aims to identify the family role in the internationalization process of two family businesses: JBS, the world‟s largest protein producer and Cutrale one of the world‟s leader in the orange juice market. Family businesses have characteristics that are intrinsic to this type of firms. Many of the internationalization reasons or even the way they internationalize has several characteristics that are common among other family businesses. Therefore, through a qualitative research the two case studies were analyzed based on the internationalization and family businesses theories. However, in those companies the role of the family was not a key role on the firms‟ internationalization processes. This aroused questions such as whether the size and/ or industry of the company had an impact on the family‟s role on the internationalization process of the business. These questions were not the focus of this study but are subsidies for future research. Keywords: internationalization process – family-owned companies – family impact on internationalization – agribusiness. THE FAMILY ROLE ON THE INTERNATIONALIZATION PROCESS OF FAMILY BUSINESSES 7 RESUMO Essa dissertação procura identificar o papel da família no processo de internacionalização de dois negócios familiares: JBS, a maior empresa de proteína animal do mundo e Cutrale um dos líderes mundiais no mercado de suco de laranja. Empresas familiares possuem características que são intrínsecas a esse tipo de empresa. Muitos dos motivos de se internacionalizar ou mesmo o modo como eles se internacionalizam podem ser extremamente característicos. Assim, através de uma pesquisa qualitativa, os dois estudos de caso foram analisados baseados em teorias de internacionalização de empresas familiares. Porém, nessas companhias estudadas, a família não desempenhou um papel relevante no processo de internacionalização das mesmas. Com esses resultados, questões surgiram, como por exemplo, se o tamanho ou segmento da empresa tiveram um impacto na importância do papel que a família possui no processo de internacionalização. Essas questões não eram o foco do estudo porém fornecem muitos subsídios para uma próxima pesquisa. Palavras-chave: Processo de internacionalização – empresas familiares – impacto da família na internacionalização – Agronegócio THE FAMILY ROLE ON THE INTERNATIONALIZATION PROCESS OF FAMILY BUSINESSES 8 LIST OF FIGURES Figure 1: The three-circle model .............................................................................................. 27 Figure 2: The five circle model ................................................................................................ 28 Figure 3: Unified system performance model for enterprising families .................................. 41 Figure 4: The basic mechanism of internationalization ........................................................... 58 Figure 5: The history of the company‟s net revenues .............................................................. 85 Figure 6: JBS‟s Corporate Governance System..................................................................... 103 LIST OF TABLES Table1:Internationalization and the network model: where do firms fit in the matrix? .......... 63 Table 2: JBS´s Company Overview ......................................................................................... 83 Table 3: JBS´s Ownership Composition .................................................................................. 95 Table 4: Management Phases of JBS ....................................................................................... 99 Table 5: JBS´s Internationalization Stages ............................................................................ 125 Table 6: Cutrale´s Internationalization Stages ....................................................................... 126 Table 7: Different types of FDI pursued by the different companies .................................... 128 Table 8: Family business attributes present in Cutrale and JBS ............................................ 137 Table 9: Family Business attributes which had an impact on the internationalization´s strategy of Cutrale and JBS ................................................................................................................. 147 THE FAMILY ROLE ON THE INTERNATIONALIZATION PROCESS OF FAMILY BUSINESSES 9 LIST OF ABBREVIATIONS (O) Ownership (L) Location (I) Internalization ABIEC Associação Brasileira das Indústrias Exportadoras de Carne ADR American Depositary Receipt BNDES Banco Nacional do Desenvolvimento Econômico e Social BNDESPAR Banco Nacional do Desenvolvimento Econômico e Social Participações BRIC Brazil Russia India China CADE Conselho Administrativo de Defesa Econômico CitrusBR Associação Nacional dos Exportadores de Sucos Cítricos DF Distrito Federal FB Family Business FCOJ From concentrated orange juice FDC Fundação Dom Cabral FDI Foreign Direct Investment FMD Food and Mouth Disease INC. Incorporated IPO Initial Public Offering LTD. Limited M&A Merger and Acquisition MNC Multinational Corporations NFC Not from concentrated PLC Public Listed Companies R&D Research and Development RBV Resource-Based View SME Small and Medium Enterprise UNCTAD United Nations Conference on Trade and Development US. United States USDA United States Department of Agriculture THE FAMILY ROLE ON THE INTERNATIONALIZATION PROCESS OF FAMILY BUSINESSES 10 TABLE OF CONTENTS 1 INTRODUCTION ........................................................................................................................ 12 1.1 Brazilian Context .................................................................................................................