Estimating The Performance Effect of Business Groups in Emerging Markets  

Oleh:

Khana, Tarun ; Rivkin, Jan W.

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: Strategic Management Journal vol. 22 no. 1 (2001), page 45-74.
Topik: BUSINESS; business groups; profit differences; corporate strategy; variance components; emerging markets

Ketersediaan

Perpustakaan Pusat (Semanggi) Nomor Panggil: SS30.7 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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Business groups confederations of legally independent firms are ubiquitous in ememrging economies, yet very little is known about their effects on the performance of affiliated firms. We conceive of business groups as responses to market failures and high transaction costs. In doing so, we develop hypotheses about the effects of group affiiation on firm profitability : affiliation could either boost or depress firm profitability, and members of a group are likely to earn rates of return similar to other members of the same group. Using a unique data set complied largely form local sources, we test for these effects in 14 emerging markets : argentina, brazil, chile, india, indonesia, israel, mexico, peru, the philippines, south africa, south korea, taiwan, thailand and turkey. We find evidence that business groups indeed affect the broad paterns of economic performance in 12 of the markets we examine. Group affiliation appears to have as profound an effect on profitability as does industry membership, yet strategy scholars have a much clearer grasp of industries than of groups. Moreover, membership in a group raises the profitability of the average group member in several of the markets we examine. This runs contrary to the wisdom, conventional in advanced economies, that unrelated diversification depresses profitabilty. Overall, our findings suggest that the roots of sustained differences in profitability may vary across institutional contexts : conclusions drawn in one context may well not apply to another.

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