The Scope of Business Groups: A Penrosian Analysis (original) (raw)
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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.
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
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.
Business Groups: An Integrated Model to Focus Future Research
Journal of Management Studies, 2007
Business groups are the primary form of managing large business organizations outside North America. This paper provides a systematic and integrative framework for understanding business groups. We argue that existing theoretical perspectives of business groups pay attention to four critical external contexts, each of which draws from a specific theoretical perspective: market conditions (transaction cost theory), social relationships (relational perspective), political factors ( political economy perspective), and external monitoring mechanisms (agency theory). Business groups adapt to these external forces by deploying various internal mechanisms along two key dimensions: one focuses on the distinctive roles of the group affiliates (horizontal connectedness) and the other focuses on coupling and order between the parent firm and its affiliates (vertical linkages). Based on these two dimensions, a typology of business group forms is developed: network (N-form), club (C-form), holding (H-form), and multidivisional (M-form). Utilizing this model we provide research questions which facilitate an improved future research agenda.
Business groups and the boundaries of the firm
Management Decision, 2011
This paper aims to show that the business group -i.e. the set of firms under common ownership and control -is the most appropriate unit to study the behavior and organization of firms and define their boundaries. Particular emphasis is given to notions such as unitary direction -i.e. the influence over strategic decisions -and administrative co-ordination which allow owners to exercise supervision and authority over the controlled companies.
The Nature of the Business Group: Power, Relational Contracts and Scope
SSRN Electronic Journal, 2000
We propose a framework for understanding the business group, a hybrid organizational form that occupies the middle ground between Þrm and market and is a prominent feature of emerging economies. These organizations are characterized by varying levels of diversiÞcation and integration. We provide an explanation for the covariation, both positive and negative, in the scope, scale and strength of integration of business groups. This notion of integration embodies the degree of tightness in the ties that connect disparate subsidiary activities to the core of the business group, and is, we believe, novel to the theory of the Þrm. We also suggest the framework may be useful for understanding internal organizational hierarchy and multiproduct Þrms. 5 This seems appropriate given the importance of networks, connections and ties of kinship in surmounting informational problems. See, for example , Rachel Kranton (1996) and Raja Kali (1999). An example of a model that uses the 'distance' metaphor for coordination costs is by Alesina and Spolaore (1997).
Journal of Management Studies, 2005
The prevalent organizational form in most emerging markets is business groups. These groups have typically been viewed through a transaction cost economics perspective where they are perceived as responses to inefficiencies in the market. However, the evidence to date on what generates a positive business groupperformance relationship in such environments is not well understood. This study expands the understanding of business groups by employing the resource-based and institutional theoretical perspectives to examine how groups acquire resources and capabilities to prosper. The empirical evidence is based on over 224 business groups in the emerging economy context of China and shows that most of the endowed government resources do not help business groups to create a competitive edge. Instead, those business groups with strategic actions to develop a unique portfolio of market-oriented resources and capabilities are most likely to prosper. The results provide critical insights on the relationship between the initiation of institutional transformation and the desired outcome to be realized by organizational transformation, thus enriching our understanding of institutions and strategic choices facilitated or constrained by organizational resources in emerging economies.
How do Business Groups Function and Evolve in Emerging Markets? The Case of Turkish Business Groups
Advances in International Marketing, 2006
Business groups have become a significant phenomenon in the evolution and functioning of emerging markets. They also provide important partnership opportunities to foreign firms when they enter these markets. Yet, business groups have not received sufficient attention in the international marketing literature. In this paper, we provide an overview of the theories that explain how business groups function and evolve in emerging markets and generate propositions from that theory. We also present evidence on business group evolution from one emerging market, Turkey. Our work should inspire research questions for future study.
Toward a Typology of Business Groups: A Qualitative Content Analysis
2024
By facilitating wider communication networks and improving the performance of their affiliated businesses in complex environments, businesses can increase their competitiveness. Understanding the characteristics and diversity of business groups is necessary for developing and implementing them. In this study, we examined the question of how business groups can be classified. What criteria can be used to separate them? We conducted a qualitative analysis of the content of 48 scientific journals published between 1999 and 2020 and selected 215 articles based on purposive sampling during two stages of screening. As a result of the content analysis, three main themes were identified: "origins of group control and ownership", "groups' institutional origins", and "intergroup relations". Also, at the first subtheme level, six categories were identified: group control level, group ownership type, diversity of group relations, dependence and cooperation level, relationship structure, and institutional contexts. There are 12 subcategories included in the second-level subthemes. "origin of corporate governance", "type of group ownership", "type of institutional contexts", "intra-group diversification", "extra-group diversification", "internal cooperation", "formalization ratio", "length of relations", "external cooperation", "geographical area", "depth of cooperation", "group maturity level". Lastly, axis factors related to the diversity of business groups were used to develop a set of typologies.