A values-based analysis of bifurcation bias and its impact on family firm internationalization

Recent analysis of family firm internationalization has shown that international performance can suffer when family owners or managers engage in an unwarranted, strict separation between two ‘generic categories’ of resources in their strategic decision-making. On the one hand, there are resources perceived as ‘being part of the family in the long run’, and therefore unique and worthy of nurturing. On the other hand, there are resources perceived as ‘with the family only for the short run’, and therefore having commodity-type status and being fungible. The concept of bifurcation bias describes this frequently observed, affect-based phenomenon of separating all resources utilized by the firm into two categories. Bifurcation bias has been argued to be particularly damaging in the context of internationalization, whereby accurate assessment and complex recombination of resources is critical. In this paper, we extend the analysis of bifurcation bias in family firms. We examine how the personal values of family firm owners and non-family members, as well as the dominant cultural values in the relevant, surrounding societies (both home and host), can influence the magnitude and dysfunctional effects of this phenomenon. Infusing values-based analysis into assessing how bifurcation bias plays out in family firms, can improve our understanding of family firm heterogeneity, has implications for empirical research, and may help invalidate some overgeneralized narratives in research on family-firm international behaviour.