A model for building capabilities among family-controlled multinational corporations in emerging markets

• The study presents a new organizational classification for FEMNCs (Family-controlled emerging market multinational corporations), shaped by the interplay between family governance and the emerging market institutional context. • FEMNCs develop four interrelated capabilities: Agility, risk allocation, opportunity exploitation, and business model innovation, which lead to their entrepreneurial growth. • Portfolio entrepreneurship emerges as a strategic response to institutional voids, enabling FEMNCs to pursue diversification across unrelated industries. • A comparative analysis of 200 MNCs reveals that FEMNCs exhibit the highest levels of diversification and conglomerate formation among their peer groups. • The study advances family business theory in the context of emerging markets by providing a contextual understanding of the development of capabilities within these markets. This study examines the growth strategies of Family-Controlled Emerging Market Multinational Corporations (FEMNCs) from a portfolio entrepreneurship perspective. While previous research on family multinationals has focused on advanced economies, this paper fills a significant gap by examining how FEMNCs develop capabilities and pursue diversification. Drawing on the resource-based view, we propose that FEMNCs develop four interconnected capabilities: agility in decision-making, risk allocation, opportunity exploitation, and business model innovation. These capabilities are influenced by the interaction between family governance and emerging-market conditions. Through a comparative analysis of 200 multinational corporations, we find that FEMNCs demonstrate higher levels of diversification and conglomerate formation than their counterparts. This study contributes to the family business literature by contextualizing the development of capabilities within emerging market ecosystems. It also extends the concept of portfolio entrepreneurship to FEMNCs, offering a novel typology for understanding multinational diversification.