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An Organizational Approach to Comparative Corporate Governance
- Costs, Contingencies and Complementarities.’ Organization Science 19(3
, 2008
"... doi 10.1287/orsc.1070.0322 ..."
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Institutions Behind Family Ownership and Control in Large Firms
, 2010
"... There is a major debate regarding the role of concentrated family ownership and control in large firms, with three positions suggesting that such concentration is (1) good, (2) bad, or (3) irrelevant for firm value. Why are there such differences? We theorize that the impact of family ownership and ..."
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There is a major debate regarding the role of concentrated family ownership and control in large firms, with three positions suggesting that such concentration is (1) good, (2) bad, or (3) irrelevant for firm value. Why are there such differences? We theorize that the impact of family ownership and control on firm value is associated with the level of shareholder protection embodied in legal and regulatory institutions of a country. Data from 634 publicly listed large family firms in seven Asian countries (Hong Kong, Indonesia,
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"... We examine the role of particularistic relationships (such as family and prior social ties) in business groups during institutional transition and test how particularistic ties between top leaders affect business group performance in Taiwan, where such ties have been central to the func-tioning of b ..."
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We examine the role of particularistic relationships (such as family and prior social ties) in business groups during institutional transition and test how particularistic ties between top leaders affect business group performance in Taiwan, where such ties have been central to the func-tioning of business groups. We propose that during mar-ket-oriented transition, family and prior social ties could improve group performance by providing informal norms that strengthen the intermediation within business groups and that family relationships could reduce strate-gic restructuring and generate performance benefits. Results of a longitudinal study over 24 years show that market transition enhanced the contribution of family and prior social relationships but not that of common-identity relationships, such as being from the same hometown, which do not involve prior direct personal contact. We also found that during transition, the positive contribution of family members would rise up to a threshold, after which additional family members tended to derail group performance, possibly due to informational disadvan-tages and a legitimacy discount in the eyes of foreign investors. The study helps to make sense of different pre-dictions about the role of particularistic ties in business group performance and makes an initial attempt at revealing how social structure affects performance. Our findings have implications for research on the value of business groups in institutional transition, interorganiza-tional relationships, and the contingencies of social rela-tionships.• Business groups, defined as “sets of legally independent firms bound together in persistent formal and/or informal ways ” (Granovetter, 1995: 95), dominate most emerging economies. Most researchers agree that the persistent rela-tionship among group affiliates is unique to this organizational
the impact of business group diversification on emerging market multinationals: evidence from latin america
"... abstraCt: This article explored whether the benefits of business group diversification on the scope-performance relationship varies depending on the level of development of the network of subsidiaries and the region of operation of the focal firm. To test the hypothesis presented, a panel data with ..."
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abstraCt: This article explored whether the benefits of business group diversification on the scope-performance relationship varies depending on the level of development of the network of subsidiaries and the region of operation of the focal firm. To test the hypothesis presented, a panel data with fix effects models was used on a sample of Latin American firms. The results suggested that business group diversification has the capacity to generate value in the internationalization process of their affiliates. However, the benefits of business group diversification are location bound within the region (Americas) but they are not related to the level of development of the targeted countries. Keywords: Internationalization, performance, business groups, institutional voids, regionalization. Diversified business groups represent the most efficient organizational form to conduct transactions in the presence of large institutional voids because they reduce transaction costs by internalizing activities. Under the adoption of market oriented institutions, the organizational costs of diversified business groups may be higher than their benefits, and hence, these business groups face pressures to refocus their operations (i.e. Chakrabarti, Given these conflicting pressures, diversified business groups may pursue other alternatives to distribute their large overhead. While the opportunities to further diversify at home are fairly restrictive, diversified business groups can encourage their affiliates to internationalize. Previous research at the firm level suggests that the non-market resources possessed by diversified business groups may have a positive impact on the internationalization of Gestión, finanzas internacionales y globalización impaCto de los grupos empresariales diversifiCados en las multinaCionales de merCados emergentes: evidenCia de amériCa latina. resumen: El presente artículo explora si los beneficios asociados a los grupos empresariales diversificados en la relación entre scope de operaciones y performance financiero dependen tanto del nivel de desarrollo de los países en los que la empresa tiene subsidiarias como de la región geográfica donde la empresa concentra sus operaciones. Para testear las hipótesis presentadas, se utilizó un estudio panel con efectos fijos en una muestra de empresas Latino americanas. Los resultados sugieren que los grupos empresariales diversificados tienen la capacidad de generar valor en el proceso de internacionalización de sus afiliadas. Sin embargo, estos beneficios se obtienen básicamente dentro de la región (América) pero no están relacionados con el nivel de desarrollo de los países en los que la empresa participa. palabras Clave: Internacionalización, performance, grupos empresariales, fallas institucionales y regionalización impaCt des groupes d'entreprises diversifiés dans les multinationales de marChés émergents : évidenCe d'amérique latine résumé : Cet article explore si les bénéfices associés aux groupes d'entreprises diversifiés dans la relation entre champ d'opérations et performance financière dépendent autant du niveau de développement des pays où l'entreprise a des subsidiaires que de la région géographique où l'entreprise concentre ses opérations. Pour tester les hypothèses présen-tées, l'auteur utilise une étude de panel à effets fixes sur un échantillon d'entreprises latino américaines. Les résultats suggèrent que les groupes d'entreprises diversifiés ont la capacité de produire une valeur dans le processus d'internationalisation de ses affiliés. Cependant, ces bénéfi-ces sont obtenus fondamentalement dans la région (Amérique) et ne sont pas en rapport avec le niveau de développement des pays dans lesquels l'entreprise a une participation.
bad, or irrelevant?
, 2010
"... Are family ownership and control in large firms good, ..."
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©2008 INFORMS Institutional Logics or Agency Costs: The Influence of Corporate Governance Models on Business Group Restructuring in Emerging Economies
"... Business groups, the leading economic players in emerging economies, have responded to the market-oriented transi-tion primarily through corporate restructuring. Agency theory predicts that acquisition and divestiture would serve the interests of dominant families and foreign investors in different ..."
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Business groups, the leading economic players in emerging economies, have responded to the market-oriented transi-tion primarily through corporate restructuring. Agency theory predicts that acquisition and divestiture would serve the interests of dominant families and foreign investors in different ways. Further, dominant families, foreign investors from shareholder-based countries, and foreign investors from stakeholder-based countries each operate under distinct institutional logics of appropriate restructuring strategies. We test hypotheses about agency and institutional mechanisms using large business groups in Taiwan between 1986 and 1998 as our empirical example. We find that, consistent with both mecha-nisms, family-controlled business groups are less likely to divest of unrelated businesses. However, the institutional logics mechanism can better explain the relative lack of unrelated acquisition in family-controlled groups and the difference in divestiture between groups with more shareholder-based foreign investment and those with more stakeholder-based invest-ment. Our study contributes to the neo-institutional perspective of corporate restructuring and strategic management in general by empirically separating the two mechanisms and examining organizational responses to conflicting institutional logics. Our study also adds to the understanding of business group restructuring in emerging economies. Key words: institutional theory; agency theory; corporate governance models; corporate restructuring; business groups; emerging economies History: Published online in Articles in Advance April 7, 2008. Corporate restructuring, or, more specifically, “acqui-
10.1177/0149206305279895ARTICLEJournal of Management / December 2005Hoskiss n et al. / Refocusing in Diversified Business Groups Diversified Business Groups and Corporate Refocusing in Emerging Economies
"... As emerging economies have improved their economic institutions, the performance of many large business groups has been reduced because such groups acted as market-substitute mecha-nisms. Consequently, business groups have become increasingly involved in refocusing activities. The authors develop a ..."
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As emerging economies have improved their economic institutions, the performance of many large business groups has been reduced because such groups acted as market-substitute mecha-nisms. Consequently, business groups have become increasingly involved in refocusing activities. The authors develop a framework in which such refocusing is explained as an attempt to balance overall transaction costs faced by groups with organization-specific costs in order to improve group performance. They examine external and internal factors that might lead to the initiation of refocusing and also explain why different ownership structures may affect the direction of that refocusing (e.g., related vs. unrelated diversification).
