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date: 07 July 2022

Abstract and Keywords

The rise of large, diversified business groups in developing and newly industrialized countries has captured the imagination of academics, journalists, and policy-makers. This article argues that the rise of business groups is best approached from a resource-based perspective—that is, by looking at the distinctive capabilities, strengths, and weaknesses of this form of organization compared to other types of firms—such as product-focused firms, small and medium enterprises, and foreign multinationals—under different development circumstances. The main argument is that business groups appear in developing and newly industrialized countries because entrepreneurs and firms learn the capability to combine the necessary domestic and foreign resources for repeated industry entry. Such a capability, however, can be developed and maintained as a valuable and rare skill only under asymmetric foreign trade and investment conditions with the rest of the world.

Keywords: business groups, academics, journalists, policy-makers, foreign resources

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