Business groups in Emerging Economies: Introduction to the Special Issue (original) (raw)
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American Review of Political Economy
Business Groups and their ubiquitous presence in emerging economies affect the broad patterns of economic performance. The study of such hybrid organizational form has been relevant to various domains such as industrial organization, corporate finance, strategic management, economics and sociology etc. This paper is an attempt to first understand the reason for their dominant presence in emerging markets and then proceeds to review the literature based on the dominant research perspectives of the existing scholarly work.
Business Groups in Emerging Markets: Paragons or Parasites?
Journal of Economic Literature, 2007
Diversified business groups, consisting of legally independent firms operating across diverse industries, are ubiquitous in emerging markets. Groups around the world share certain attributes but also vary substantially in structure, ownership, and other dimensions. This paper proposes a business group taxonomy, which is used to formulate hypotheses and present evidence about the reasons for the formation, prevalence, and evolution of groups in different environments. In interpreting the evidence, the authors pay particular attention to two aspects neglected in much of the literature: the circumstances under which groups emerge and the historical evidence on some of the questions addressed by recent studies. They argue that business groups are responses to different economic conditions and that, from a welfare standpoint, they can sometimes be “paragons” and, at other times, “parasites.” The authors conclude with an agenda for future research.
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.
The internationalization of emerging market business groups: an integrated literature review
International Marketing Review, 2010
Purpose -The purpose of this paper is to review the extant literature on the institutional, market-centered, and the resource-based perspectives on the internationalization of BGs in emerging markets; to suggest that business group affiliation is an important ingredient in the internationalization of emerging market MNCs; and to offer examples of internationalization from one emerging market, Turkey. Design/methodology/approach -This is a critical literature review integrating two strands of literature, the institutional, market-centered and resource-based theories of internationalization and the OLI and the LLL models of emerging market multinationals' international expansion. Findings -The theorizing indicates that an integrated theoretical approach should lead to a better understanding of emerging market business group affiliates' internationalization. Research limitations/implications -As a literature integration paper, the paper is limited in its practical implications. Originality/value -The paper is a critical literature review and is likely to lead to testable hypotheses about the internationalization of business group affiliates from emerging markets.
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.
Diversified Business Groups in Emerging Economies
Diversified business groups dominate the organizational landscape of many emerging and transition economies. Are these diversified groups good or bad for these economies? How can we explain their emergence and persistence? Why are they so visible and dominant in developing countries but not in developed ones? How should regulatory authorities view them? In this paper we review recent theoretical and empirical research on this subject to throw some light on these questions.
The role and functioning of business groups in east Asia and Chile
2000
We compare group affiliation in seven East Asian countries and Chile, using data for more than 1,000 publicly traded firms. We document that 75% of listed firms are associated with groups in East Asia, but only 40% in Chile. We find evidence that group structures are used to diversify risks internally as firms' market risk is influenced not only by own characteristicssuch as size, price/book ratiobut also by group characteristics, especially in Chile. There are costs to groups, however. For East Asian countries, we find that group structures are used by controlling owners to expropriate other shareholders. On balance, it appears that business groups are not beneficial to shareholders.
Business groups and the study of international business: A Coasean synthesis and extension
Journal of International Business Studies
This paper harmonizes the business group literature in international business and across relevant fields within a unified theoretical framework. Business groups (firms under common control but with different, if overlapping, owners) are economically important in much of the world. Business groups’ economic significance co-evolves with their economies' institutions and market environments, patterns of particular interest to international business scholars. The vast literature on business groups raises discordant perspectives. This paper first proposes a unifying definition and provides a list of stylized historical observations on business groups across different parts of the world. It then develops a Coasean framework to harmonize seemingly disparate views from the literature by building on recent surveys and the stylized historical patterns of business groups. We enlist two concepts – fallacies of composition/decomposition and time inconsistency – to harmonize these perspective...
This paper investigates the implications of inter-organizational networks and relationships (as informal institutions) for firms' strategic choices and performance in emerging economies, testing two key propositions of the institution-based view of strategy proposed by institutional strategy literature. First, informal constraints will play a larger role in emerging economies, reducing uncertainty, providing guidance, and conferring legitimacy and rewards to managers and firms, where formal constraints are unclear or fail. Second, as formal market-supporting institutions are gradually implemented, a gradually reduced role of interpersonal relationships and more reliance on market-based capabilities will be observed. To test these two key propositions, business groups in multiple emerging economies are investigated,. The investigation of business groups in multiple emerging economies confirms both key propositions. In essence, this paper tries to answer the question of 'how institutions matter', particularly in emerging economies.
International strategy and business groups: A review and future research agenda
Motivated by the growth and internationalization of business groups, this paper reviews the business group literature and presents a future research agenda, highlighting their implications for international strategy. The paper identifies theoretical tensions and empirical ambiguities around three key business group features—corporate governance, internal markets, and corporate strategy—and three key outcome variables—performance, economic impact, and innovation—that have generated significant debate. We conclude with three methodological concerns relevant to these debates: generalizing business group research across countries, endogeneity in business group research, and performance measurement in business groups.