Abstract
The history of Samsung and its central office shows the influence of exogenous social and economic change on business-group structures and the endogenous development of capacity in a business group. This paper investigates how transaction cost operates in regard to group size and the functions retained or otherwise, centralized or decentralized, by central office. In relation to business-group development, the effectiveness of transaction cost and active capacity-building are examined and weighed. Entrepreneurs reacting to external changes have raised group capabilities and sought to maintain group integrity. The central-office activities of allocation, ratification, nurturing, and sharing are also discussed and conceptualized.
Similar content being viewed by others
References
Amsden, A. and Hikino, T. (1994) Project execution capability, organizational know-how and conglomerate corporate in late industrialization. Industrial and Corporate Change 3(1): 111–147.
Barney, J. (1991) Firm resources and sustained competitive advantage. Journal of Management 17(1): 99–120.
Becker-Ritterspach, F. and Bruche, G. (2012) Capability creation and internationalization with business group embeddedness: The case of Tata Motors in passenger cars. European Management Journal 30(3): 232–247.
Belenzon, S. and Berkovitz, T. (2010) Innovation in business groups. Management Science 56(3): 519–535.
Carney, M. (2008) The many futures of Asian business groups. Asia Pacific Journal of Management 25(4): 595–613.
Carney, M. and Gedajlovic, E. (2003) Strategic innovation and the administrative heritage of East Asian family business groups. Asia Pacific Journal of Management 20(1): 5–26.
Carney, M., Gedajlovic, E.R., Heugens, P.P., Van Essen, M. and Van Oosterhout, J.H. (2011) Business group affiliation, performance, context and strategy: A meta-analysis. Academy of Management Journal 54(3): 437–460.
Castellacci, F. (2015) Institutional voids or organizational resilience? Business groups, innovation and market development in Latin America. World Development 70: 43–58.
Chang, S.J. (2006) Business groups in East Asia: Post-crisis restructuring and new growth. Asia Pacific Journal of Management 23(4): 407–417.
Chang, S.J. and Choi, U. (1988) Strategy, structure and performance of Korean business groups: A transaction cost approach. Journal of Industrial Economics 37(2): 141–158.
Chang, S.J. and Hong, J. (2000) Economic performance of group-affiliated companies in Korea: Intragroup resource sharing and internal business transactions. Academy of Management Journal 43(3): 429–448.
Chang, S.J., Chung, C.N. and Mahmood, I.P. (2006) When and how does business group affiliation promote firm innovation? A tale of two emerging economies. Organization Science 17(5): 637–656.
Chari, M.D. and Dixit, J. (2015) Business groups and entrepreneurship in developing countries after reforms. Journal of Business Research 68(6): 1359–1366.
Choi, P.P. and Ning, X. (2013) Extension and integrity of business groups: Evidence from China. Asian Business & Management 12(2): 253–280.
Claessens, S., Djankov, S., Fan, J.P.H. and Lang, L.H.P. (1999) Corporate diversification in East Asia: the role of ultimate ownership and group affiliation. World Bank policy research working paper 2089. Washington DC: World Bank.
Coase, R.H. (1937) The nature of the firm. Economica 4(16): 386–405.
Colpan, A.M. and Hikino, T. (2010) Foundations of business groups: towards an integrated framework. In: A.M. Colpan, T. Hikino and J.R. Lincoln (eds) The Oxford Handbook of Business Groups, pp. 15–66.
Goto, A. (1982) Business groups in a market economy. European Economic Review 19(1): 53–70.
Guillen, M.F. (2000) Business groups in emerging economies: a resource-based view. Academy of Management Journal 43(3): 362–380.
Khanna, T. and Palepu, K. (1997) Why focused strategies may be wrong for emerging markets. Harvard Business Review 75(4): 41–51.
Khanna, T. and Palepu, K. (2000a) The future of business groups in emerging markets: long-run evidence from Chile. Academy of Management Journal 43(3): 268–285.
Khanna, T. and Palepu, K. (2000b) Is group affiliation profitable in emerging markets? An analysis of diversified Indian business groups. Journal of Finance 55(2): 867–891.
Khanna, T. and Yafeh, Y. (2007). Business groups in emerging markets: Paragons or parasites? Journal of Economic Literature 45(2): 331–372.
Khanna, T., Song, J. and Lee, K. (2011) The paradox of Samsung’s rise. Harvard Business Review 89(7/8): 142–147.
Kikuchi, H. (2005) Formation and dissolution of business groups (Kigyo shudan no keisei to kaitai). Tokyo: Nihonkeizai Hyoronsha.
Kim, H., Hoskisson, R.E., Tihanyi, L. and Hong, J. (2004) The evolution and restructuring of diversified business groups in emerging markets: The lessons from chaebols in Korea. Asia Pacific Journal of Management 21(1–2): 25–48.
Kim, H., Kim, H. and Hoskisson, R.E. (2010) Does market-oriented institutional change in an emerging economy make business-group-affiliated multinationals perform better? An institution-based view. Journal of International Business Studies 41(7): 1141–1160.
Kitaoka, T. (2005) The Most Powerful Enterprise, Samsung (Samsung yiduryupda). Seoul: Chaekbo.
Kock, C.J. and Guillén, M.F. (2001) Strategy and structure in developing countries: Business groups as an evolutionary response to opportunities for unrelated diversification. Industrial and Corporate Change 10(1): 77–113.
Lee, H.G. (1999) History of Korean chaebols’ formation (Hankook chaebol hyung sungsa). Seoul: Bibong.
Lee, K. and He, X. (2009) The capability of the Samsung group in project execution and vertical integration: Created in Korea, replicated in China. Asian Business & Management 8(3): 277–299.
Lee, K. and Hong, K. (2014) Governance systems of successful Korean corporate groups. Korean Journal of Management 22(1): 1–38.
Lee, K., Peng, M.W. and Lee, K. (2008) From diversification premium to diversification discount during institutional transitions. Journal of World Business 43(1): 47–65.
Lee, K., Kim, J.Y. and Lee, O. (2010) Long-term evolution of the firm value and behavior of business groups: Korean chaebols between weak premium, strong discount and strong premium. Journal of the Japanese and International Economies 24(3): 412–440.
Leff, N. (1978) Industrial organization and entrepreneurship in developing countries: The economic group. Economic Development and Cultural Change 26(4): 661–675.
Li, M., Ramaswamy, K. and Petitt, B.S.P. (2006) Business groups and market failures: A focus on vertical and horizontal strategies. Asia Pacific Journal of Management 23(4): 439–452.
Luo, X. and Chung, C.N. (2005) Keeping it all in the family: The role of particularistic relationships in business group performance during institutional transition. Administrative Science Quarterly 50(3): 404–439.
Ma, X., Yao, X. and Xi, Y. (2006) Business group affiliation and firm performance in a transition economy: A focus on ownership voids. Asia Pacific Journal of Management 23(4): 467–483.
Mahmood, I.P. and Mitchell, W. (2004) Two faces: Effects of business groups on innovation in emerging economies. Management Science 50(10): 1348–1365.
Manikandan, K.S. and Ramachandran, J. (2015) Beyond institutional voids: Business groups, incomplete markets and organizational form. Strategic Management Journal 36(4): 598–617.
Matsusaka, J.G. (2001) Corporate diversification, value maximization and organizational capabilities. Journal of Business 74(3): 409–431.
Miwa, Y. and Ramseyer, J.M. (2002) The fable of the keiretsu. Journal of Economics and Management Strategy 11(2): 169–224.
Morikawa, H. (1992) Zaibatsu. Tokyo: University of Tokyo Press.
Nonaka, I.A. and Takeuchi, H.A. (1995) The Knowledge-creating Company: How Japanese companies create the dynamics of innovation. New York: Oxford University Press
Penrose, E. (1959) The Theory of the Growth of the Firm. New York: Wiley.
Samsung Biseoshil (Samsung Secretariat) (1988) Samsung 50 Years History (Samsung 50 nyunsa). Suwon: Samsung.
Samsung Biseoshil (Samsung Secretariat) (1998) Samsung: 60 Years History (Samsung 60 nyunsa). Suwon: Samsung.
Seoul News (2007) Chaebol Family (Chaebol aac). Seoul: MuHan.
Wan, W.P., Hoskisson, R.E., Short, J.C. and Yiu, D.W. (2011) Resource-based theory and corporate diversification: Accomplishments and opportunities. Journal of Management 37(5): 1225–1368.
Wang, H., Huang, H. and Bansal, P. (2005) What determined success during the Asian economic crisis? The importance of experiential knowledge and group affiliation. Asia Pacific Journal of Management 22(1): 89–106.
Wu, X.B. (2007) Agitating 30 Years (Jidangsanshinian). Beijing: CITIC (in Chinese).
Yafeh, Y. (2003) An international perspective of corporate groups and their prospects. In M. Blomström, J. Corbett, F. Hayashi and A. Kashyap (eds) Structural Impediments to Growth in Japan. Chicago: University of Chicago Press, pp. 259–284.
Yiu, D.W. (2011) Multinational advantages of Chinese business groups: A theoretical exploration. Management and Organization Review 7(2): 249–277.
Yiu, D., Bruton, G.D. and Lu, Y. (2005) Understanding business-group performance in an emerging economy: Acquiring resources and capabilities in order to prosper. Journal of Management Studies 42(1): 183–206.
Yiu, D.W., Lu, Y., Bruton, G.D. and Hoskisson, R.E. (2007) Business groups: An integrated model to focus future research. Journal of Management Studies 44(8): 1551–1579.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Choi, P.P. Evolution of Samsung group and its central office: Imperfect market and capacity-building. Asian Bus Manage 15, 370–398 (2016). https://doi.org/10.1057/s41291-016-0011-1
Received:
Revised:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1057/s41291-016-0011-1