What does the literature say about business groups and pyramidal ownership in the period of 1960-2018? (original) (raw)
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British Journal of Management, 2011
The hierarchically nested set of business groups that result from 110 Mexican firms sharing corporate directors (i.e. interlocking directors) is analysed using social network tools. It is argued that these groupings are one of the many dimensions that should be employed to understand the complex nature of 'business groups' broadly understood. The hypothesis that business groups are responses 'to market failures that arise in the particular institutional contexts of emerging economies' (Khanna and Rivkin, Strategic Management Journal, 22 (2001), p. 46) is tested using the groups constructed from data on interlocking directorates. The results show that as firms belong to more of the same sets of groups, their financial performance tends to be more similar, thus supporting the idea that 'groups can make up for underdeveloped institutions, thereby reducing transaction costs'
Institutions and Organizational Structure: The Case of State-Owned Corporate Pyramids
Journal of Law, Economics, and Organization, 2012
Pyramidal organizational structures are common throughout the world. This article considers an explanation for pyramids built by the state: separating firms from political interference. Although intermediate pyramidal layers insulate managers from a pyramid's top owners and hence induce agency costs, they also minimize political costs of state intervention. All else equal, the optimal division of power between the government and the managers should be the point at which the marginal agency costs are equal to the marginal political costs. Our empirical results, based on hand-collected data for 742 local government-owned Chinese business groups are generally in line with this hypothesis.
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.
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).
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.
CEPR Discussion Paper Series, 2020
Large business enterprises, from the railroad barons of nineteenth century America to Amazon and Google today, are often perceived as important for economic performance and, at the same time, as potential abusers of their political and economic power. In this study, we compare the experiences of four countries that implemented policies to curb the influence of one type of large corporate entities â?? pyramidal business groups: The US in the 1930s; Japan during the American occupation (1945-1952); Korea following the Asian crisis (late 1990s); and Israel in the last decade (2010-2018). Novel regulatory measures, applied consistently in the US and Japan, where the extreme political circumstances were very favorable to economic reform, led to the demise of pyramidal business groups in these countries. Israel, where the reforms did not follow a severe crisis, also used specifically-designed regulatory tools over a decade-long period, resulting in a significant decline in the number and ...
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.
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...
Innovation in Pyramidal Ownership Structures
Finance Research Letters, 2015
We examine the association between a pyramidal ownership structure and the intensity of high-tech companies' investments in innovation. We find that companies in pyramidal business groups invest in innovation with greater intensity than similar companies that are not part of such an ownership structure. Furthermore, the intensity of investment in innovation is significantly higher the lower the firm is situated in the pyramid, where the ultimate owner has a smaller share of the equity. However, these findings are statistically significant only for biotechnology firms. It seems that for biotech companies, the pyramidal structure serves to transfer the immense investment risk inherent in them away from the ultimate owners further down the pyramid where they have a lower stake in profits and losses. In that sense, the inclusion of biotech firms further down the pyramid is, in effect, a particular kind of tunneling.