Eduardo Fracchia, Luiz Mesquita, and Juan Quiroga
This article presents the origins and recent evolution of Argentine business groups. It provides a brief basic profile of these business groups in terms of size, ownership, governance, and structure. For that, this article reviews the origins and evolution of business groups, addressing in particular the way they have responded to recent transformations in the business environment. In short, this article is intended to offer research on an exploratory basis on the experience of business groups in emerging countries, in an attempt to enrich the understanding of their strategic decisions and behaviors. One interesting feature of this study is that it combines qualitative and quantitative data, collected both through in-depth interviews and from public information sources on Argentine business groups.
Dante M. Aldrighi and Fernando A. S. Postali
As in many other countries, business groups in Brazil are typically owned by families and owe much of their evolution and weight in the national economy to government policies. Nonetheless, their structures and strategies seem to present some idiosyncrasies. Focusing on the context wherein business groups in Brazil emerged and have evolved, this article endeavors to shed some light on why their structures and strategies exhibit some peculiarities. As a rule, the current main Brazilian business groups typically originated before 1960; were either founded or strongly supported, through various types of subsidies, by the state; have one ultimate controlling shareholder owning a great number of firms through pyramidal schemes; started to target more systematically export markets only in the 1970s and 1980s; and only after 1990 have pursued a strategy of direct investment abroad.
Chilean business groups tend to be structured as a collection of listed and non-listed companies presenting highly concentrated ownership and hanging under a listed holding company. These characteristic pyramidal structures are used to obtain funding from minority shareholders without losing control. Many of the large companies affiliated to Chilean business groups have traded in a relatively developed capital market with a considerable participation of institutional investors since 1986. Most Chilean business groups are relatively young and are successfully run by the second or third generation of the founding families. However, in some cases, control has passed to teams of executives and to foreign companies. This article looks at the main features of Chilean business groups and tries to find some stylized factors that help in an understanding of their dynamic evolution.
Keun Lee and Young‐Sam Kang
Apart from some incidence in the early twentieth century, modern-style business groups emerged in China in the mid-1980s as a consequence of the reform and restructuring of state-owned enterprises, which aimed at increasing economies of scale and specialization. Since their early emergence, a substantial number of Chinese business groups have succeeded in becoming major players in the world economy, and the Chinese government has played an important role in the formation and development of these business groups. This article provides a descriptive analysis of the business groups in China, extending and updating the recent literature. It discusses a basic profile and history of these business groups. It also focuses on the role of the state in the emergence of these groups. Finally, it discusses the problems of ownership structure and agency costs in these business groups, and deals with their business structure and diversification.
Tarun Khanna and Yishay Yafeh
The ubiquity and diversity of business groups make the study of this institution fascinating. Conceptually, this hybrid organizational form between firm and market can shed new light on the theory of the firm and its boundaries. This article attempts to make three contributions to the literature on business groups. The first is motivated by the view that the diversity of business groups around the world is due to the diversity of the underlying conditions leading to their formation. The second contribution of the study is the presentation of new stylized data and evidence on several facets of business groups that go beyond the existing literature. The third contribution of this study is to question some of the conventional wisdom in the literature. The rest of this article is organized around the taxonomy of business groups around the world.
The objective of this article is to examine the evolution of family business groups in India, one of the fastest-growing emerging economies in recent times and a country where business groups have been an integral part of the economy ever since formal industrial activity took its roots in the country around the latter half of the nineteenth century. This article seeks to provide a historical overview of the process of evolution of Indian business groups in economic activity, focusing specifically on the dynamics underlying its persistence and resilience as a dominant organizational form despite significant changes in the institutional environment from time to time. In doing so, this article seeks to highlight, in light of the existing theoretical and empirical literature on business groups, important elements of their organizational structure, diversification strategies, their governance and performance, and finally on changes in their competitive capabilities, if any, over time.
Konstantin Kosenko and Yishay Yafeh
Business groups of various forms and types have existed in Israel almost constantly since its independence. This article begins with a brief summary of the relevant institutional and economic characteristics of Israel, and proceeds to provide a broad historical overview of Israel's business groups, focusing primarily on forces that facilitated their growth, and on the evolution of privately owned business groups in parallel to the demise of government-controlled ones. It also discusses the privatization and ownership changes since 1990 and the evolution of Israel's business elite. Furthermore, it presents a detailed picture of the major business groups in Israel, their economic activity, ownership and control structure, and performance using panel data on 650 public companies from 1995 to 2005. It defines a business group as a group where at least three public companies are controlled by the same (ultimate) shareholder.
The purpose of this article is to reveal the reasons behind the growth of large Mexican business groups and the changes in their characteristics under the neo-liberal economic reforms and intensified competition that have occurred since the second half of the 1980s. Mexico experienced the emergence and growth of business groups during the process of import substitution industrialization (ISI). They are generally called grupos económicos, or economic groups, and have played important roles as actors of economic development. In the literature on Mexican business groups that focused on their growth in the period of ISI, as in the standard arguments for the emergence of business groups, their emergence was explained as a response by Mexican capitalists to conditions imposed by economic underdevelopment. Business groups also benefited from protection from international competition because of the government policies on trade and foreign direct investment.
Hideaki Miyajima and Shinya Kawamoto
The objective of this article is to examine the evolution and economic function of business groups, often referred to as zaibatsu, in prewar Japan. It should be noted, however, that, in spite of the prominence of the zaibatsu as economic actors, the share of business groups in the prewar economy was not as high as is often assumed. While the share of business groups in an economy varies depending on definitions of business groups and dates of estimation, their prewar share was also modest when compared to the shares of their counterparts in developing economies. In prewar Japan, most large firms operated as stand-alone entities, and most of them were listed on the stock exchange. Focusing on the three established zaibatsu and Nissan, this article examines how business groups evolved in prewar Japan, and what functions they served.
This article tracks the evolution of Russian business groups since their emergence during privatization in the 1990s and the restructuring and consolidation that followed. As in other economies, the growth of business groups in Russia has been a natural response to multiple market and government failures that gave rise to “institutional economies of scale.” This article argues that some of the business groups will grow into major multinational companies while others will be acquired by foreign multinationals (either unit by unit or wholesale). Few are likely to remain diversified conglomerates. Furthermore, this article also discusses the phenomenon of government-owned business groups and so-called state corporations. While the focus of this article is on private business groups, understanding their evolution is virtually impossible without reference to state-owned groups, or the large state-owned firms (which may be bigger than many business groups but essentially have one business unit).
Lai Si Tsui‐Auch and Toru Yoshikawa
Like many other economies, the Singaporean economy is dominated by business groups. As in a number of other East and South East Asian economies, family-controlled business groups control a high stake of the economy in Singapore. However, unlike many others, the Singaporean economy has a predominance of government-linked business groups rather than family-controlled ones. These groups are constituted by unusual hybrids of state and private enterprises. This article describes the characteristics of the largest business groups and outlines the political and economic contexts of Singapore. It summarizes the emergence and growth of the business groups as well as their change in the historical contexts of Singapore and the region, with a specific focus on the extent of the changes in these groups by 2006 as compared to 1997 when the Asian economic crisis occurred. It also examines the competitive capabilities of these groups.
This article updates a previous analysis of the changing face and strategies of South African big business. In particular, it examines whether the group structure that characterized the country's business system under apartheid is now being used in the context of black economic empowerment. It presents an historical overview of the development of South African business groups and sketches the main policy developments since 1994 and their influence on groups. It also analyzes the case of Anglo-American and Rembrandt, by far South Africa's largest groups. Furthermore, it analyzes the recent rise of black groups in the broader framework of changing state–business relations. It concludes by framing the discussion in the broader pictures of the discussion on the transformation of corporate ownership in emerging economies and of the dynamics of economic growth and job generation in South Africa.
By 1996, Korea had emerged as the world's eleventh largest economy and as a major global player in many industries ranging from shipbuilding and steel to semiconductors and automobiles, becoming the second Asian country after Japan to join the Organization for Economic Cooperation and Development. At the heart of Korea's rapid and successful industrial transformation have been the family-controlled, diversified business groups known as chaebol, which have at times been praised and at other times criticized. The rise, fall, and re-emergence of the chaebol pose an intriguing question for scholars and public policy-makers alike. This article starts with a brief historical overview of the genesis and subsequent evolution of the chaebol. It then discusses their diversification, globalization, and corporate governance, and finally concludes with their theoretical, practical, and public policy implications.
Chi‐Nien Chung and Ishtiaq P. Mahmood
This article examines the formation and evolution of the one hundred largest business groups in Taiwan from the 1970s to the 2000s. It first provides a brief description of the formation process of business groups in Taiwan. Specifically, it refers to the main arguments related to the emergence of business groups in the literature, market power, state and policy targeting, and persistent social systems. Furthermore, it investigates the strategy and structure of Taiwanese business groups. It develops indicators and studies the trends of product diversification and internationalization of the groups. In terms of group structure, it discusses inter-firm ties among affiliates within the groups and how the diversification strategy and inter-firm ties have co-evolved. The next area of discussion concerns the governance structure of the group. Finally, it considers the competitive capabilities of the group.
Natenapha Wailerdsak and Akira Suehiro
This article aims to examine the development of business groups in Thailand. It considers business groups, not just as a response to market failure or institutional voids in emerging markets, but as vehicles for economic catch-up with more industrialized nations. This article briefly describes the development of business, with an emphasis on family-run groups, and their survival despite changes in economic and political environments until the 2000s. It then sketches the structure of ownership and management of family business groups. It also examines the business diversification and internationalization strategies of major business groups before and after the 1997 Asian financial crisis. It also looks at the impacts of the crisis, and at corporate governance reform, focusing on the banking sector and listed companies. Finally, this article concludes by looking at the competitive capabilities of leading Thai business groups, and considers their future challenges.
Asli M. Colpan
This article aims to examine the evolution of the Turkish large-enterprise economy focusing on the family-owned diversified business groups. Turkey presents a still-unexplored yet fascinating national instance of the primacy of business groups, because that nation exemplifies an environment that differs both from East Asia and from Latin America. By concentrating on the different geographical environment of Turkey, the present research provides a fresh look at the development of business groups. In doing so, this study, utilizing the data in various primary and secondary sources, first comes up with a comprehensive list of the largest economic players in Turkey such as business groups, independent companies, state-owned enterprises, and multinational subsidiaries. That list reveals that business groups remain the core element of the large-enterprise economy of Turkey. This article then focuses on the overall growth strategies of Turkish business groups. These discussions lead to structure and governance concerns.
James R. Lincoln and Masahiro Shimotani
The purpose of this article is to discuss the postwar Japanese keiretsu. In the face of powerful forces of institutional and economic change, the groups have “withered away,” such that they no longer constitute a significant topographic feature of the Japanese economic landscape, despite having been one from the 1950s to the early 2000s. The review of the keiretsu presented here is largely retrospective. This article gives an overview of the horizontal and vertical keiretsu; how they differed from business groups in other countries; where they came from; how they were structured; their benefits and liabilities for individual firms and the Japanese economy as a whole; why they have largely died out; and whether they—the vertical groups in particular—might be revived.
Jonathan Story and Thomas Lawton
This article takes the position that strategy and policy must be seen as complementary because they provide a different lens to look on the future as the holism through which current resources in the firm are developed and allocated. It starts with time as the key variable to consider, and sketches a stylized survey of how corporate strategy thinking has evolved, with a view to teasing out the key tensions that businesses encounter when operating in a semi-integrated world market and polity. It then looks closer at the relation between corporate policies and the diversity of states, discusses the evolution of the global state and market system, and spells out some of the key challenges facing corporate leaders making strategies and policies to both shape and understand the future.
Carola Frege and John Godard
This article focuses on the differences between the United States and Germany. These two nations are viewed as representative of distinctive varieties of capitalism, and they have very different representation rights and institutional norms accounting for these varieties. The contribution of this article is to address the reasons for this variation and why it persists in view of such pressures. It begins by briefly describing cross-national differences in representational rights and in organizational governance structures associated with these rights (or lack thereof). The article then addresses various explanations that have or can be advanced to explain this variation and why it persists. Next, based on these explanations, it adopts a historical-institutionalist perspective to explore the historical basis of this variation.
Paul Hirsch, Peer C. Fiss, and Amanda Hoel‐Green
The work of Émile Durkheim, and particularly his theory of the division of labor, occupies a somewhat peculiar place in the pantheon of classical sociologists. This article extends Durkheim's analysis of Europe's transformations in the early twentieth century to suggest how his theoretical apparatus might be used to interpret subsequent developments in the twenty-first. In particular, it suggests that Durkheim's concern with solidarity—a key theme of his work—has been largely neglected in the current field of organization studies, which might be reinvigorated by a greater concern for issues of inequality in the global arena.