, Volume 23, Issue 4, pp 419-437
Date: 23 Nov 2006

Business groups and their types

Rent the article at a discount

Rent now

* Final gross prices may vary according to local VAT.

Get Access

Abstract

We clarify what business groups are and analyze their various types. We first distinguish business groups from other types of firm networks based on the strategic relationships among companies; business groups are defined as those networks that exhibit unrelated diversification under common ownership. We then separate business groups into three types based on their ownership: family-owned, widely-held, and state-owned. We argue that each type has different agency costs and diversification logics. As a result of these differences, their performance varies, with family-owned business groups outperforming widely-held ones, and these in turn outperforming state-owned business groups.

I am grateful to Michael Carney, Andrew Delios, Mike Peng, Kendall Roth, Annique Un, two anonymous reviewers, and participants at the Asia Pacific Journal of Management special issue conference on conglomerates and business groups in Asia-Pacific for their suggestions. The Asia Academy of Management and the National University of Singapore provided financial support to attend the Asia Pacific Journal of Management special issue conference. Additional funding was provided by the Center for International Business Education and Research at the University of South Carolina. All errors remain mine.