Filling the institutional void: The social behavior and performance of family vs non-family technology firms in emerging markets Danny Miller 1 , Jangwoo Lee 2 , Sooduck Chang 3 and Isabelle Le Breton-Miller 1 1 HEC Montreal, and University of Alberta, Alberta, Canada; 2 Department of Management, Kyungpook National University, Daegu, Korea; 3 Department of Business Administration, Hannam University, Daejon, Korea Correspondence: D Miller, HEC Montreal, and University of Alberta, 4642 Melrose Avenue, Montreal QC, Canada H4A 2S9. E-mail: danny.miller@hec.ca Received: 10 January 2006 Revised: 19 November 2008 Accepted: 23 December 2008 Online publication date: 9 April 2009 Abstract Family businesses (FBs) are said to treat their employees with unusual consideration to form a cohesive internal ‘‘community’’. They are also claimed to develop deeper, more extensive ‘‘connections’’ or relationships with outside stakeholders. Both behaviors may increase the viability of a business intended to support an owning family and its later generations. Such social linkages, we believe, may compensate for the lack of capital, product and labor institutional infrastructures in dynamic emerging economies. This survey study of a most challenging emerging-market sector, namely Korean high- technology businesses, argues three major points. (1) Relationships of community and connection will be more common in FBs than in non-FBs. (2) These relationships will enhance performance in emerging-market high- technology sectors, which, because of their competitive, complex, and ever- changing nature, rely on significant expert knowledge and social capital within and outside the organizational community. (3) The performance of FBs will benefit more from these community and connection relationships than the performance of non-FBs, because in these personally intimate settings employees and external partners will be especially likely to return the generosity of a visibly active owning family, or to penalize its selfishness. Significant empirical support was found for most of these hypotheses. Journal of International Business Studies (2009) 40, 802–817. doi:10.1057/jibs.2009.11 Keywords: family firms; human resource management (HRM); inter-organizational relationships; institutional gaps; social capital; emerging markets INTRODUCTION This paper first argues that family businesses (FBs) are more apt than non-FBs to form close relationships with employees and external stakeholders that enable them to outperform in the most turbulent sectors of emerging markets. It suggests that such ties may be especially useful in such economies because they fill what Khanna and Palepu (1997) have termed an ‘‘institutional void’’ in capital, product and labor markets. The paper then develops hypotheses about the relative prevalence and performance impli- cations of these relationships in family vs non-family firms, and tests them on a sample of Korean high-technology firms. It concludes with a discussion of results. Family firms account for about half of the US gross national product, employ over half of the workforce, and create more than Journal of International Business Studies (2009) 40, 802–817 & 2009 Academy of International Business All rights reserved 0047-2506 www.jibs.net