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date: 26 February 2021

Abstract and Keywords

Business groups are large, consisting of diversified firms that are persistently bound. Seen as isolated phenomena in very distinct institutional environments, their dominance is often inexplicable. This article suggests stepping away from the cross-section and studying the longitudinal bottom-up emergence of business groups, thus coupling statistical models with historical context. It proposes that business groups are a type of signature. The interplay between law-like properties of firm-size distributions and the micro-motives of economic agents lead to the emergence of business groups. An approach that uses baseline models that describe the macro-patterns, such as the presence or absence of power-law distributions, is useful to bounding the number of candidates for micro-behavioural explanations. In the end, the analysis of business groups as emergent may reveal new, if not greater, commonalities across countries than are currently available through comparative institutional analysis.

Keywords: business groups, signature, law-like properties, firm-size distributions, micro-motives

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