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Book part
Publication date: 2 July 2012

Ji-Hwan Lee and Seungjin Hong

Purpose – This chapter aims to identify and address methodological issues inherent in business group studies, especially within the context of South Korean chaebols, many…

Abstract

Purpose – This chapter aims to identify and address methodological issues inherent in business group studies, especially within the context of South Korean chaebols, many of which have been exalted as most remarkable cases of business groups.

Design/Methodology/Approach – After reviewing the theoretical background and the evolution of chaebols, the authors identify methodological issues focusing on the constructs of major interest to researchers, which need careful treatment for enhancing the internal and external validity of studies on business groups in general and chaebols in particular.

Findings – Any sample of business groups must be composed based on accurate definitions rather than conventional lists readily available, in accordance with the research purpose. Identifying and quantifying the strategic and structural characteristics of business groups should be accompanied by an understanding of the various types of economic organizations. The uniqueness of business groups in each country should also be considered, especially in conducting comparative analyses and generalizing research findings. Measuring performance needs more careful attention given the increasing complexity in many business groups. The embeddedness of business groups in a specific society as well as their coevolution with the institutional context urges researchers to employ more qualitative or ethnographic methods.

Originality/Value – The authors suggest alternatives through which we can cope with the methodological issues, and make suggestions for future research. As business groups continue to play a significant role in many emerging economies, continuing efforts to elaborate methods will contribute to improving the value of our scholarly work in both academic and practical dimensions.

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West Meets East: Building Theoretical Bridges
Type: Book
ISBN: 978-1-78190-028-4

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Article
Publication date: 9 August 2021

Donghong Li, Zhenning Yang, Pengcheng Ma and Hang Chen

The purpose of this paper is to document the relationship between intra-group coopetition and subsidiaries' innovation performance and the moderating impact of the…

Abstract

Purpose

The purpose of this paper is to document the relationship between intra-group coopetition and subsidiaries' innovation performance and the moderating impact of the intensity of external competition.

Design/methodology/approach

Data were collected from 75 subsidiaries in China through a questionnaire survey of their R&D and general managers. The total number of individual respondents was 205. We tested our hypothesis by using ordinary least squares regression.

Findings

Intra-group cooperation was found to promote a subsidiary's performance in product and process innovation. Intra-group competition was found to have a U-shaped relationship with product and process innovation. Intra-group cooperation strengthens the U-shaped relationship between intra-group competition and process innovation.

Research limitations/implications

This study involved firms from more than one industry. Studies of specific industries might reach more specific conclusions. And all of the data were self-reported by the managers of the firms concerned. Future studies would be well-advised to consider more objective data describing pairs of parent firms and subsidiaries.

Practical implications

Subsidiaries ought to build their internal networks to cooperate with each other. That can bring significant advantages in terms of information and synergy in innovation. Subsidiaries are also suggested to take full advantage of the opportunities that intra-group competition brings.

Originality/value

This study is the first one to explore coopetition phenomenon in the context of business group. By taking Chinese business group subsidiaries as the research samples, this research not only extends the coopetition research but also reveals that cooperation and competition are co-existed and exert influence in subsidiaries.

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Management Decision, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0025-1747

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Book part
Publication date: 9 November 2004

Robert E Hoskisson, Heechun Kim, Robert E White and Laszlo Tihanyi

Prior research on international diversification has focused primarily on multinational enterprises (MNEs) from developed economies, such as the U.S. and other developed…

Abstract

Prior research on international diversification has focused primarily on multinational enterprises (MNEs) from developed economies, such as the U.S. 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. Using the resource-based view (RBV) of the firm and organizational learning theory, we suggest that the international diversification motives of business groups from emerging economies vary by host country context. Business groups from emerging economies are more likely to enter developed economies (rather than other emerging economies) when their primary aim is exploring new resources and capabilities, and more likely to enter other emerging economies (rather than developed economies) when their primary aim is to exploit existing group resources and capabilities. We also suggest that these motives influence business-group performance. We identify two important moderators of these relationships: product diversification and social capital. Because of the importance of the business-group organizational form in emerging economies, understanding business-group international diversification may lead to improved MNE theory.

Details

"Theories of the Multinational Enterprise: Diversity, Complexity and Relevance"
Type: Book
ISBN: 978-1-84950-285-6

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Article
Publication date: 7 August 2009

Jun Zhao

This paper aims to explore the roles different ownership structures, the joint effect of related and unrelated diversification strategies, and previous performance levels…

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Abstract

Purpose

This paper aims to explore the roles different ownership structures, the joint effect of related and unrelated diversification strategies, and previous performance levels have on the restructuring strategies of such firms.

Design/methodology/approach

Annual reports of publicly traded firms in the two Chinese stock exchanges are used to collect data. Multiple regression and ANOVA analysis are used to examine the impact of ownership structure types, match between diversification strategies, and previous performance on the change of business scopes of the sample business groups.

Findings

Compared to other ownership types, government owned business groups tend to increase their business scope during asset restructuring, while private business groups tend to decrease their scopes through divestitures and spinoffs. Poor previous performance is also found to be negatively related to change in business scopes. The “match” between related and unrelated diversification strategies of the business groups leads to increase in business scopes, while “mismatch” between these two strategies tends to lead to decrease in business scopes.

Practical implications

This study provides some recommendations to managers and public policy makers in emerging economies. There is a need to monitor the changing institutional environment a firm operates in. It is up to the managers of business groups to determine the degree of market imperfections they are facing and the need to compensate with internal market mechanism and social exchange mechanism within the group structure. As China opens its door further to private ownership and foreign ownership, the pressure to increase efficiency and effectiveness along with the continuous improvement of the institutional environment will require that managers adopt strategies that can enhance the competitiveness of the firms, whether it is through further diversification or scope reduction.

Originality/value

This research deepens our understanding of restructuring strategies of Chinese business groups, by linking factors such as ownership structure, diversification strategies, and past performance to scope changes in these groups. It can broaden our understanding of corporate restructuring in transitional economies, such as China and India.

Details

Management Research News, vol. 32 no. 9
Type: Research Article
ISSN: 0140-9174

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Article
Publication date: 6 November 2019

Subramanian Shanmugasundaram

The purpose of this paper is to study the relationship between corporate governance practices and internationalization through foreign direct investments in the context of…

Abstract

Purpose

The purpose of this paper is to study the relationship between corporate governance practices and internationalization through foreign direct investments in the context of family-owned business groups in India.

Design/methodology/approach

The comparative case study method is used to understand the relationship between corporate governance practices and internationalization using four family-owned business groups in India.

Findings

The ownership concentration negatively influences the internationalization, while transparency has a positive association. Professionalization of management helps in internationalization. Overall, good corporate governance practices have a positive influence on group internationalization.

Research limitations/implications

This paper provides detailed discussions based on the case study research which would help the future research work on the relationship between corporate governance practices and internationalization.

Originality/value

The existing literature studies in this field in the context of emerging markets are inconclusive. Hence, this paper uses the case study method to understand the relationship better.

Details

Journal of Family Business Management, vol. 10 no. 1
Type: Research Article
ISSN: 2043-6238

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Article
Publication date: 4 April 2017

Mohammad Badrul Muttakin, Arifur Khan and Dessalegn Getie Mihret

This study aims to investigate the moderating role of audit quality on the association between business group affiliation of firms and earnings management in the South…

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1687

Abstract

Purpose

This study aims to investigate the moderating role of audit quality on the association between business group affiliation of firms and earnings management in the South Asian emerging economy of Bangladesh.

Design/methodology/approach

A usable sample of 917 firm-year observations was drawn from companies listed on the Dhaka Stock Exchange from 2005 to 2013. Data were collected from the annual reports of sample companies. Earnings management was measured using the absolute value of discretionary accruals, and two proxies were used to measure audit quality: auditor size and industry specialisation.

Findings

Results showed that the level of discretionary accruals is positively associated with business group affiliation status, and higher audit quality reduces this association. This suggests that in environments without strong investor protection, complex ownership structures create opportunities for controlling shareholders to expropriate minority shareholders. The controlling shareholders could then mask this practice through earnings management. The findings also show that in environments lacking strong investor protection, audit quality can help improve earnings quality for group-affiliated firms.

Practical implications

The results suggest that financial statement users need to consider audit quality for a reasonable evaluation of the earnings quality of business groups. The study also informs regulators by illuminating audit quality as a key area of focus in any effort directed at enhancing stock market efficiency through improved earnings quality in environments where business group affiliation is prevalent.

Originality/value

This study documents empirical evidence on the moderating effect of audit quality on the positive association between business group affiliation and earnings management.

Details

Managerial Auditing Journal, vol. 32 no. 4/5
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 30 July 2019

Ron Berger, Ram Herstein, Daniel McCarthy and Sheila Puffer

The purpose of this paper is to analyze the role of Wasta, a culturally based system of social networks of exchange among in-group members in the Arab world, as…

Abstract

Purpose

The purpose of this paper is to analyze the role of Wasta, a culturally based system of social networks of exchange among in-group members in the Arab world, as exemplified by three groups of Arabs in the Palestinian Authority, and then compares it to Guanxi (China), Sviazi (Russia) and JaanPechaan (India). The use of social networks is a common business model around the world to accomplish business objectives and is especially relied upon in emerging economies where formal institutions are weak. It is important to understand the commonalities and differences in the use of reciprocity in various cultural contexts in order to conduct business effectively. The aim of the paper is to illustrate the structure of Wasta and how it is perceived and constructed among three Arab social groups, and then compare and contrast it with social business models in three other high context cultures.

Design/methodology/approach

Qualitative approach based on interviews to better understand the relationships involved.

Findings

The findings provide the foundation for a number of critical insights for non-Arab managers seeking to do business in the Arab world. For international managers to conduct business successfully, it is essential to understand how Wasta works, and establish relationships with members of influential social networks by building trust over time such that they create Wasta for themselves and indirectly for their firms. Using Wasta in the Arab world, as noted above, is similar to doing business successfully in other emerging economies such as using Sviazi in Russia (McCarthy and Puffer, 2008; Berger et al., 2017), Guanxi in China (Yen et al., 2011) and Jaan–Pechaan in India (Bhattacharjee and Zhang, 2011). The authors feel more confident in stating this view after comparing Wasta with these other three concepts, and noting that all four are built upon the same fundamental constructs.

Research limitations/implications

The authors recognize that the study is limited in terms of the geographical sample since it does not include any non-Palestinians, although the managers the authors sampled came from various regions in the Palestinian authority. Additionally, Palestinian managers are highly educated and mobile, and can be found in many other Arab countries working in managerial positions (Zineldin, 2002), thus potentially broadening the generalizability of the findings. Nonetheless, the samples would be called ones of convenience rather than randomly drawn from the three groups, since the latter would be extremely difficult to execute not only in the Palestinian Authority but in most of the Arab world due to the culturally based reluctance to provide sensitive information to those outside one’s network. Despite the difficulties that might be involved in exploring such culturally sensitive issues as the authors did in this study, the benefits in knowledge gained can be of significant importance to the study of international business in emerging and transition economies.

Originality/value

Little research has focused on the use of Wasta in the Arab world, a gap which this paper addresses. The authors do so by analyzing the views of Wasta held by three important groups – leaders, business people and students. While each type of reciprocity has its own unique characteristics, the authors focus on three interrelated constructs that have been found to underlie the use of reciprocity in various cultures. In the Arab world, these are Hamola, which incorporates reciprocity; Somah, that incorporates trust; and Mojamala, which incorporates empathy through social business networks.

Details

International Journal of Emerging Markets, vol. 14 no. 5
Type: Research Article
ISSN: 1746-8809

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Article
Publication date: 8 October 2018

Mohammad Fuad and Mohammad Akbar

This study aims to explore the role of liberalization, business group affiliation and degree of internationalization (DOI) on the performance of Indian international new…

Abstract

Purpose

This study aims to explore the role of liberalization, business group affiliation and degree of internationalization (DOI) on the performance of Indian international new ventures (INVs).

Design/methodology/approach

The study identifies Indian INVs incorporated between 1991 and 2010 against the backdrop of liberalization. To test various hypotheses, a random effects panel regression analysis was conducted for publicly listed Indian INVs.

Findings

The results highlight that business group affiliation and DOI are positively related to INV performance. Further, liberalization negatively moderates the relationship between group affiliation and INV performance. The authors’ findings indicate that as institutions improve, the positive effect of business group affiliation on firm performance decreases in emerging markets.

Research limitations/implications

This paper highlights the benefits accruing to business group affiliated INVs and the moderating role of liberalization on firm performance. Future studies may augment the authors’ understanding of INV performance by testing heterogeneity within business groups and their impact on INV performance across other emerging economies.

Practical implications

As institutional reforms strengthen over time, the positive effect of group affiliation on INV performance declines. Hence, managers of group affiliates need to adapt to the changing institutions faster and develop their fit with the institutional environment earlier than standalone firms, to mitigate their profitability issues.

Originality/value

To the best of the authors’ knowledge, this is the first paper to discuss the role of business group affiliation and the moderating role of liberalization on INV performance with theoretical and managerial implications.

Details

European Business Review, vol. 30 no. 6
Type: Research Article
ISSN: 0955-534X

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Article
Publication date: 29 November 2018

Anish Purkayastha

The purpose of this paper is to explore the existing mechanism through which business group affiliated firms in emerging markets (EMs) continue to generate superior performance.

Abstract

Purpose

The purpose of this paper is to explore the existing mechanism through which business group affiliated firms in emerging markets (EMs) continue to generate superior performance.

Design/methodology/approach

The authors build our argument on the basis of how business group affiliation in EM facilitates internationalization and investment into innovation in affiliated firms compared to un-affiliated firm, resulting in higher firm performance. The authors use advance statistical modeling – causal mediation analysis to separate direct effect and indirect effect of business group affiliation in EM on performance through internationalization and investment into innovation of business group affiliated firms as mediating variables.

Findings

Based on 122,479 observations (firm year) from 17,235 Indian business group affiliated and un-affiliated firms, the findings help to identify that internationalization and investment into innovation of business group affiliated firms do have a mediating role in affiliation–performance relationship for EM business groups.

Originality/value

This study unravels the existing causal chain between business group affiliation in EMs and subsequent performance of affiliated firms. The authors complement institutional argument for superior performance of business group affiliation and focus on the performance implication of mediating strategic decisions in affiliated firms.

Details

International Journal of Emerging Markets, vol. 13 no. 6
Type: Research Article
ISSN: 1746-8809

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Article
Publication date: 17 June 2008

Hsi‐Mei Chung

Based on the panel data analysis of Taiwan’s family business groups from 2000 to 2002, this research attempts to investigate the relationships among the types of ownership…

Abstract

Based on the panel data analysis of Taiwan’s family business groups from 2000 to 2002, this research attempts to investigate the relationships among the types of ownership structure, particularistic ties, and the engagements in regional markets from a social capital perspective. The result indicates that a family business group’s use of particularistic ties is contingent on its relative centralization in decision‐making. Consequently, the family business group’s use of particularistic ties in subsidiaries significantly influences its engagements in regional markets. This study highlights the possible role of particularistic ties as a kind of firm‐specific advantage existing within family business groups when expanding internationally. Furthermore, it indicates that the indigenous particularistic ties intrinsic to Great China societies have implications for multinational companies in the context of this region.

Details

Multinational Business Review, vol. 16 no. 2
Type: Research Article
ISSN: 1525-383X

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