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Context-bridging and context-embedded experience: Growth drivers of emerging economy business groups

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Abstract

This study examines emerging economy business groups’ growth directions during institutional change. Building on Penrose’s Theory of Growth of the Firm, we explore managerial resources as foundations for growth. Specifically, we argue that their growth directions are critically shaped by the nature of managerial experience of business groups. Experience that is context-embedded supports growth within the existing strategic paradigm, whereas context-bridging experience enables international growth. We test hypotheses derived from this theoretical argument for business groups in Taiwan, and find empirical support for our arguments.

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Notes

  1. One limitation of this measure is that it captures commitment in foreign direct investment but overlooks export. We nevertheless chose it over foreign sales ratio because new entry into foreign markets does not necessarily generate sales in the first few years and thus under-represent managerial decision to commit in foreign markets. Sales-based measures for internationalization often reflect the performance of the internationalization action (Sullivan, 1994). For our sample, the correlation coefficient between change in foreign asset ratio and change in foreign sales ratio is 0.75. We report empirical results based on foreign sales ratio in the robustness check section.

  2. Persons are identified as core decision makers if they met one of the following criteria: (1) the chairpersons, CEOs, and in some cases, vice presidents of the listed companies; or (2) family members who are sitting on the board (i.e., directors with family background).

  3. The government in Taiwan is structured as four-level central authorities and two-level local authorities. The first-level central authorities include Executive Yuan, Legislative Yuan, and three other Yuans. The second-level central authorities are ministries and committees that report, for the most part, directly to the Executive Yuan.

  4. The list for strategic industries is reviewed and renewed every few years. In the 2000 list, for example, strategic manufacturing industries cover five main businesses: semiconductor, information, communication equipment, biotech, and software technology.

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  1. Department of International Business, National Chengchi University, 64, Chih-Nan Rd. Sec. 2, Taipei, 116, Taiwan

    Danchi Tan

  2. Ivey Business School, Western University, 1255 Western Road, London, Ontario, N6G 0N1, Canada

    Klaus E. Meyer

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Tan, D., Meyer, K.E. Context-bridging and context-embedded experience: Growth drivers of emerging economy business groups. Asia Pac J Manag 38, 401–434 (2021). https://doi.org/10.1007/s10490-019-09658-0

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