Beyond the Bamboo Network Beyond the Bamboo Network The Internationalization Process of Thai Family Business Groups Maetinee Hemrit Dissertation for the Degree of Doctor of Philosophy, Ph.D. Stockholm School of Economics 2011 Keywords: Internationalization, Emerging Multinationals Business Groups, Family Business Groups, Weak Institutions, Developing Countries, Emerging Economies Thailand, Ethnic Chinese, Overseas Chinese, East Asian Capitalism Beyond the Bamboo Network: The Internationalization Process of Thai Family Business Groups © SSE and the author, 2010 ISBN 978-91-7258-843-1 Cover by: © Suchart Wongthong, 2010 Printed in Sweden by: Intellecta Infolog, Göteborg 2010 Distributed by: The Research Secretariat Stockholm School of Economics Box 6501, SE-113 83 Stockholm, Sweden www.hhs.se iv To my parents Preface This volume is submitted as a doctor’s thesis at the Stockholm School of Economics. The author has been entirely free to conduct and present her research in her own ways as an expression of her own ideas. The research presented in the thesis was initiated at the late Institute of International Business (IIB) and concluded within the Department of Marketing and Strategy at the Stockholm School of Economics. The research has been generously funded by IIB and the European Institute of Japanese Studies. Several firms cooperated through their managers in the preparation of the thesis as detailed in the same. All this generous support and assistance is gratefully acknowledged by the Stockholm School of Economics. Stockholm, March 6, 2011 Richard Wahlund Professor Head of the Department of Marketing and Strategy Stockholm School of Economics Acknowledgements Life is a journey. Sometimes you can plan; often, you can’t – it is a matter of destiny. Clearly, that’s what happened to me, how I came to Sweden and specifically to the Stockholm School of Economics (SSE). Just a click on a webpage, the journey began. Initially, it was set to be rather short for another master degree, but later I found myself walking into the long and challenging road of the PhD study. Also, it was quite a radical change from the macro-level thinking as an econ- omist to the micro-level attention in the field of international busi- ness (IB). Putting in the IB words, I was struggling with “liabilities of foreignness” – not only to take in the Swedish context, but also to understand the new discipline and the academia world. Hardly imagine that I would survive, yet flashing back especially at the place where the whole journey began, I simply smile. This chapter of my life is full of memories, and I would like to thank you every person and every organization that have played a part in my learning journey. To begin with, I would like to express my gratitude for the Swedish Aid Organization, aka “SIDA”, that granted me the full scholarship for my master degree education. SIDA gave me the first ticket to the new world, to the beauty on water, to Stockholm. Yet, Stockholm was the beauty on “icy” water, when I first arrived. The temperature was -17 degree Celsius; all lakes were frozen; there was no smile on people’s face; everything was dark. On top of that, I didn’t know anyone in this strange city. Undoubtedly, I did ask myself several times “Why am I here?” and perhaps cry almost every time. This doubt remained basically until I met Carolin Axelsson in a master-level course; we then became the master thesis partner. Liter- ally, Carolin opened the door to the Swedish society for me. Because of our endless discussion, I started seeing things from different pers- pectives and considered being in Sweden for a while longer, for the doctoral degree. So, a big thank to you, Carolin, my Swedish sister! Still, the idea would not materialize without the great support from my supervisor. Ari Kokko is the one carrying me through, from the master thesis to the entire PhD process, and always there listen- ing to all kinds of my complaints, and giving me back food for thought. At times, together with Eija, I would get some real good food plus karaoke too, making me feel at home and being taken care. My highest gratitude is to you both. Along this social line, I would like to thank everyone at the Euro- pean Institute of Japanese Studies (EIJS) for the warm friendships. Es- pecially to Anders Engvall and Magnus Andersson who first scared me with their almost perfect Thai, Magnus Blomström for setting me off on the track, Nanhee Lee for all kinds of support, Le Thanh Forsberg, Ka- zune Funato Hallgren, and Marie Tsujita Stephenson for our girly talks, Lars Ågren and Marie Söderberg for backing me along the process. Fairly intertwined and equally important are of course everyone who used to be part of the late Institute of International Business (IIB). Above all, I am most grateful to my main supervisor, Peter Hagström, who has always believed in me more than I do to myself. Peter has given me all the freedom in research and guided me throughout the process in the way that many seem to doubt. But, I know you truly care. In addition, my appreciation goes to all the eclectic brains at the late IIB and at the Department of Marketing and Strategy: Carl Fey, Örjan Sölvell, Richard Wahlund, Patrick Regnér, Henrik Glimstedt, and more. Directly and indirectly, I have learned a lot from you. My special thanks are to Udo Zander for thoroughly reading through my empirical findings and for all the comments and supports over the years. Also, I would like to thank my associate PhD students and eve- ryone in the corridor for all the positive energy. Especially to Göran Lindqvist, Claes Bohman, and Jesper Edman, the three Swedes who had looked after me around the Nordic study trips and assisted me in many ways, to Emre Yildiz, Sergey Morgulis-Yakushev, Sergiy Protsiv, Elena Braccia, and more for the international mix, and to the ladies, Malin Ekberg, Lena Wretman, and Kerstin Wedin, at the back office. Altogether, I am highly indebted not only to the EIJS and IIB for financing my PhD study, but also to the SSE and to the Swedish so- ciety as a whole for the generosity. I do hope that one day I will be able to contribute back to this country, my second home. Life at the school had been tough at times, in fact most of the time. As the only Thai student at SSE, during weekends I usually enjoyed x surrounding myself with Thai friends from other schools, mostly engi- neers, scientists, and IT specialists of different types. We often made good mix and great fun, while we also had supported each other through the cold and long winters as well as the bright and beautiful summers of Stockholm. The friendships have grown and last. My thanks are to P’Jo, P’Nom, Golf, Cherry, June, Pookie, Hip, Pae, Third, Lor, Win, Ying, Jeab, and more. Likewise, I would like to express my warm feeling to all the good old friends who have never failed me re- gardless of the distance, especially to Weaw and our parallel life. During my empirical investigations, i.e., to tap into the world of the influential business groups in Thailand and to confirm my data coding, I draw from a long list of my own bamboo network of family and friends. My thanks go to Ning, Oh, Peung, Pun, Andy, Leki, P’Eve, P’Jeab, P’Roong & P’V, P’Nong, and Eva S. to mention a few (most in nicknames). To all the informants, I am indebted to you for sharing your experiences and insights. Again, I have no intention to cause your troubles, and I deeply apologize if my research had made you feel uncomfortable at some points. Also, thank you very much for proofreading and accepting the analyses in most cases. Of all people, family is my ultimate strength. I strived for high education mainly because of my father. He said that children have to achieve more than the parents and that we (my brother and I) should make the best out of the opportunities. Not everyone have opportuni- ties; surely, my father did not. To carry out his inspiring thought, the heavy role has been on my mother. The PhD process was by far the toughest undertaking, and totally remote from what she has ever ex- perienced. Yet, when I felt so despair and lost all the confidence, it was her who boosted me up times after times. This work is therefore dedicated to the unconditional love and support of my parents. Last but not least, my special thanks go to Pelle, the other half of my life. It is incredible how much you have done for me and borne with me. Being a new resident in Thailand, you should have received a lot of attention, but I was nothing but neglecting you. Still, you are the most understanding and greatest support – keep telling me “Zu Zu” toward the end of this journey. Thank you very much for your love and patience. Nonthaburi March 5th, 2011 xi Contents 1. Family Business Groups: Local Interest Meets Global Challenge ...... 1 1.1 Research Motivation: How Firms Grow in Different Contexts ... 2 1.2 Research Focus and Delimitations: Family Business Groups ... 8 1.3 Research Setting: Exploring the Population of Thai FBGs ...... 11 1.4 Organization of the Dissertation ............................................ 13 1.5 Main Findings and Potential Contributions ........................... 14 2. Internationalization: A Growth Alternative for Family Business Groups? ............................................................................................ 17 2.1 The Foundation of International Business Research .............. 17 2.2 The Development of International Business Research in the Globalizing World ...................................................................