The Scope of Business Groups: A Penrosian Analysis (original) (raw)
Related papers
The Scope of Business Groups: A Penrosean Perspective
2007
ABSTRACT Organizations face trade-offs when designing growth strategies. With limited resources, managers have to decide in which type of business they want to deploy their resources. We integrate the Penrosean theory of the growth of the firm with institutional perspectives to analyze when business groups expand in different product areas, and when they expand abroad.
Product Diversification and International Expansion of Business Groups
Management International Review, 2012
Purpose: Does product diversification constrain or boost international expansion of business groups from emerging markets? What is the role of international orientation and group resources in moderating this relationship? Given the dominance of business groups as an organizational form in emerging markets and their recent international expansion, these research questions are pertinent and timely.
Business group internationalization: choosing a host country according to institutional distance
Purpose – This research analyzes to what extent committing resources to the internationalization of family business groups is related to the institutional distance of the host country. Design/methodology/approach – We used OLS panel data with fixed effects. Findings – We identified that family business groups decide to internationalize themselves committing fewer resources to countries that present a positive institutional distance, and that are more institutionally developed than the country of origin. On the other hand, when family business groups choose to expand abroad committing more resources, they tend to invest in countries with a negative institutional distance, and that are less institutionally developed than the country of origin. Originality/value – Our main contribution to existing theory on internationalization of family business groups is to test the relationship between the level of resource commitment by family business groups in their international expansion and the institutional distance between the country of origin and the host country. Keywords – Family business groups; internationalization; resource commitment; institutional distance.
Advances in International Management, 2004
Prior research on international diversification has focused primarily on multinational enterprises (MNEs) from developed economies, such as the United States and other developed nations. As an increasing number of MNEs are now located in emerging economies, new theoretical frameworks are needed to better understand the motivations of these MNEs to diversify internationally. This paper contributes to the theory development of MNEs by examining the characteristics of international diversification by business groups from emerging economies.
Growth, Diversification, and Business Group Formation in Entrepreneurial Firms
Small Business Economics, 2005
Recent empirical research has demonstrated that the growth process of entrepreneurial firms is frequently achieved through the formation of business groups: i.e. a set of companies run by the same entrepreneur (or entrepreneurial team). This has been hypothesised as result of a growth process by diversification of the original activity. This entrepreneurial growth process offers an alternative explanation for the formation of business Groups, than that arising from managerial efficiency and expediency. The main aim of the article is to explore group formation through entrepreneurial diversification using a sample of high growth entrepreneurial firms. The analysis demonstrates that the running of a group of companies by the same entrepreneur is not only induced by the geographical extension of their operation and by diversification but also by the differentiation policy aimed at serving different market segments within the same sector. This seems to contrast with the diversification policy and organisational setting of large, managerial firms
The effects diffuse and direct of political strategy on the diversification of business groups
2014
Diversification is an important aspect of business group’s strategy. Existing explanations about political foundations of diversification are too broad (Schneider, 2008). We conducted an in-depth qualitative research through interviews and extensive secondary data to unveil the mechanisms by which firm’s political strategy influences business groups’ diversification. Political strategies stressed by literature (Hillman and Hitt, 1999; Claessens et al., 2007; Faccio, 2006; Bandeira-de-Mello and Marcon, 2011) are present in sixteen diversifications analyzed. We contribute to theory by adding an explanation about how political strategy mechanisms affect business groups’ diversification.
Explaining Business Groups Growth Through Political Strategy: Qualitative Comparative Analysis
We expand the theory by adding an explanation about how political strategy mechanisms affect business groups' (BG) growth. Growth is an important aspect of BG strategy and can be either by expansion or diversification. We conducted qualitative research through 16 interviews and 480 files of secondary data. We analysed data using QCA method. Results shows that Historical Relationship is a necessary but insufficient condition of BG growth. When Historical Relationship is associated with a precise political strategy mechanism growth tends to an expansion. When it is associated with government origin BG diversificates. Findings have relevant implications for political strategy theory.
Does Internationalization of Business-Group-Affiliated Firms Depend on Their Performance?
Advances in Business Strategy and Competitive Advantage, 2018
Previous research on international operations of the business groups (BG) have predominantly looked into the effects of internationalization on various frontiers of business. Pertaining to emerging economies, the implicit assumption is internationalization helps to avert the uncertainties of market imperfections. We raise doubt on the implicit assumption that just being affiliated to a parent firm will provide the resources for internationalization. Therefore, we have taken up this study, to understand the dynamics of emerging economy multinationals, which are characterized by their asset seeking nature to internationalize. We have tested our hypotheses on listed Indian firms. We have selected top 499 BSE listed companies, which had reported the highest amount of sales in 2010 as the base, and we generated a balanced panel dataset of 2994 firm years using the observations for the period 2010-2015. We used General Linear Square (GLS) fixed effects model to examine the impact of performance of BG affiliated firms on their degree of internationalization. We expected a positive relationship between firm performance and degree of internationalization, which was further anticipated to be positively moderated by business group affiliation of firms.
2016
While the general principles of the Institutional Perspective have been widely accepted, there has been only limited consideration to the present time of their in-depth application to the strategies of individual firms engaged in international business. The paper argues that companies engaged in such activities will find that there is a significant gap in precisely what aspects of the formal and informal institutional perspectives need to be identified and assessed for international expansion. The purpose of this paper is to develop a theoretical paradigm that allows organizations not only to compare different countries with regard to their potential for international business expansion from the perspective of Institutional Theory but also drawing on theories of International Business Strategy where relevant. The theoretical framework assumes that such organizations are engaged in analyzing the institutional arrangements and resources of their home and possible host countries. The p...