The Evolution and Restructuring of Diversified Business Groups in Emerging Markets: The Lessons from Chaebols in Korea

This paper proposes an evolutionary model of business groups in emerging economies by tracing the evolution and restructuring of business groups in Korea. Underlying our model are two theoretical premises: (1) the value-creation potential of business group diversification depends on the quality of the economic institutions supporting the economy; and (2) the strategy-structure fit is a key determinant of diversified business groups' performance. Combining these two premises, we link business group evolution with institutional context, sources of competitive advantages, diversification strategy, and structure. To illustrate our theoretical arguments, we provide an overview of the evolution of chaebols in Korea and examine the restructuring of two major business groups, LG and Hyundai Motor. We conclude by discussing implications for management, public policy, and future research.     

Business group affiliation and firm performance in a transition economy: A focus on ownership voids

In a transition economy, how does business group affiliation make a difference in firm performance? Under the broad label of institutional voids, what specific voids can business groups fill? This paper addresses these questions by drawing on insights from property rights theory and an institutional perspective. We argue that ownership voids, as a subset of institutional voids, occur due to the lack of unambiguously specified ownership of state assets in transition economies, and that business groups emerge to serve as the direct owners of state-owned enterprises to replace such voids. Based on a sample of 1,119 publicly-listed Chinese companies, we find that the interaction of business group affiliation and state ownership has a significant and positive effect on firm performance. Our findings point to business group’s substitution role in filling ownership voids in China’s transition economy.     

Coordination versus organization: Diverging logics of firm cooperation in Denmark and Sweden

Employers and their business associations have become increasingly important actors promoting market competition – even in once highly coordinated and regulated European economies. Based on a comparison of the Danish and Swedish telecommunications industries, we ask how differences in business association structures relate to the ways firms cooperate in competitive markets. In Denmark, fragmented, competing business associations encouraged a more unstable logic of coordination, with firms predominately focussed on pursuing particularistic interests in public policy lobbying and exit-oriented strategies in employment relations. In contrast, the unified business association in Sweden encouraged a logic of organization, with firms predominately seeking collective good provision in public policy lobbying and engaging in mutual gains bargaining. Findings contribute to debates on the role of business associations in fostering firm cooperation and collective regulation.     

A conceptual review of human resource management research and practice in Taiwan with comparison to select economies in East Asia

Human resources are increasingly crucial to the growing economies of East Asia, which are striving to diversify economically toward higher value-added product-markets to continue their growth. Human resource management (HRM) in Taiwan, based on Confucianism and influenced by Western management research and practice, has been experiencing a major paradigm shift of sorts in recent years. With Taiwan’s rapid economic growth followed by its industrial and institutional transformation, HRM in the region has been developing to cope with the increasingly competitive and fast-changing business world. As such, this study reviews HRM’s development in Taiwan over the recent decades. The reviewed studies were gathered from work published from 1990 to 2016 appearing in the Social Sciences Citation Index or Taiwan Social Sciences Citation Index Chinese journals. A detailed discussion of HRM development in Taiwan is made, along with a summarizing scheme and some comparison to HRM in other select economies in East Asia, including those of Mainland China and Hong Kong which share the same cultural lineage and values.     

Supporting new product commercialization through managerial social ties and market knowledge development in an emerging economy

While it has been advocated that the generation and application of market knowledge shape marketing capabilities to commercialize new products, the weak institutional environment makes access to critical market knowledge challenging in emerging economies. Critically, managerial social ties with business and political institutions may complement the firm’s market orientation (MO) to obtain market knowledge that is not available in the open market in emerging economies. This study draws attention to the differential roles of business and political ties in complementing or inhibiting the effects of market orientation on exploratory and exploitative marketing capabilities in one of the “Next Eleven” emerging economies, Iran. The results help firms operating in emerging economies to identify the conditions under which business and political ties help to overcome institutional limitations, complement market-oriented efforts, and successfully commercialize new products.     

Liberalisation policy,industry structure and productivity changes in Korea’s telecommunications industry

The paper examines the efficiency implications of the liberalisation policy in Korea’s telecommunications industry. The paper develops a contextual understanding of the Korean evolutionary path and discusses various transitional difficulties and additional complications posed by business conglomerates that Korea confronted. Examining factors affecting efficiency, the paper shows how the government commitment to the liberalisation schedule imposed a credible competitive threat to the incumbent carriers and enhanced dynamic efficiency of the industry.     

Are emerging economies less efficient? Performance persistence and the impact of business group affiliation

By drawing a theoretical distinction between the persistence of superior and poor performance, we reconcile the conflicting predictions of the ‘revisionist’ and accepted views on the persistence of firm performance in emerging economies. Using a sample of manufacturing firms in the United States and India, we show that superior firm performance in emerging economies persists only as much as developed economies in line with the revisionist argument. We also provide evidence consistent with the accepted view that poor firm performance persists longer in emerging economies compared to developed economies. Further exploration of the latter shows that, contrary to predictions of extant theories, firms in emerging economies that are affiliated with an MNC or a business group have a greater persistence of poor performance than firms that are unaffiliated with these intermediate governance structures, and hence would be better off operating at arm's length. Copyright © 2005 John Wiley & Sons, Ltd.     

Where can capabilities come from? network ties and capability acquisition in business groups

While strategy researchers have devoted considerable attention to the role of firm‐specific capabilities in the pursuit of competitive advantage, less attention has been directed at how firms obtain these capabilities from outside their boundaries. In this study, we examine how firms' multiplex network ties in business groups represent one important source of capability acquisition. Our focus allows us to go beyond the traditional focus on network structure and offer a novel contingency model that specifies how different types of network ties (e.g., buyer‐supplier, equity, and director), individually and in complementary combination, will differentially affect the process of R&D capability acquisition. We also offer an original analysis of how other aspects of network structure (i.e., network density) in business groups affect the efficacy of network ties on R&D capability. Empirically, we provide an original contribution to the capabilities literature by utilizing a stochastic frontier estimation to rigorously measure firm capabilities, and we demonstrate the value of this approach using longitudinal data on business groups in emerging economies. We close by discussing the implications of our supportive results for future research on firm capabilities, organizational networks, and business groups. Copyright © 2010 John Wiley & Sons, Ltd.     

Who Do Firms Lay Off and Why?

I develop and test a structural–historical account of corporate reductions in force (RIF) to assess whether this widespread process was redistributive or efficient. I argue that changes in the context of restructuring in recent decades, coupled with substantial changes in organizational compensation systems, lead to temporal variation in the likelihood of “broken‐contract” RIF, in which firms terminate highly paid managers, and “trimming the fat” RIF, in which firms terminate low‐performing managers. Analyses of personnel records from a Fortune 500 manufacturing firm indicate that low performance leads to increased risk of separation in each of the two RIF undertaken by the firm, with the effect becoming stronger over time in part because of changes in the firm’s performance management system. By contrast, high wages were a more important factor explaining departure during the firm’s RIF in the 1980s—when competitive pressures to default on bonded contracts were strong—than during its RIF in the 1990s.     

Corporate governance failure and contingent political resources in transition economies: A longitudinal case study

This paper explores the dynamic relationship between politicians and entrepreneurs in the governance of business organizations in transition China. A longitudinal case study of Kelon (1984–2001), a product of politician-entrepreneur alliance in China’s household appliance sector, reveals how certain political resources that once assisted the entrepreneurs in creating competitive advantages in transition economies may turn into political liabilities during the course of institutional transition. Drawing upon the resource-based view (RBV) of the firm, the rent appropriation literature, and the agency theory, this paper sheds light on the contingent impacts of political resources on corporate governance and firm performance in transition economies.     

新形势下的房地产企业的战略转型

面对新形势和房地产宏观调控政策，房地产企业应该尽快调整战略目标。完成战略转型，以此提高核心竞争力。在新形势下房地产企业应该从经营理念、赢利模式和产品结构上尽快完成企业的战略转型。     

How to build great research groups

Business school leaders would like to attract and keep the top research talent in order to stay competitive, attract high-potential students, and recruit the most promising young faculty. To accomplish these objectives, a successful research environment for its business academic researchers needs to be established, so that they can produce a sustainable research stream. We examine important antecedents including business school research strategy, leadership, governance, and policy, and from these we develop a set of conditions that are related to long-term success of research programs in academic business institution. As detailed illustrations, we elaborate the experiences of two active research institutions—the Industrial Marketing and Purchasing (IMP) Group and the Contemporary Marketing Practices (CMP) Group — and discuss how each of these groups has implemented the conditions for success. We conclude with general observations on the environmental conditions most conducive to sustainable business school research, and present implications regarding the role of the journal editor as a gatekeeper.     

Governance Structure and Exit: Evidence from California Hospitals

Most inpatient and emergency health care services in the U.S. are delivered by non-profit organizations. To understand the impact of policies that are designed to affect competitive outcomes in hospital markets, it’s important to understand whether the “non-profit” structure changes the behavior and competitive conduct of firms. Given the complexity of the product space within which hospitals operate, we focus on more easily interpreted decisions within the hospital market: entry and exit. Using comprehensive administrative data for the universe of California hospitals from 1980 to 2013, we document the observed entry and exit behavior. We estimate flexible exit policy functions and demonstrate a difference in behavior between for-profit and non-profit firms that exists after accounting for several observable characteristics of hospitals. We find differences in observed behavior: this is a finding that strongly suggests that there are differences in the underlying objective function of the various firms.     

自然垄断产业垄断的"自然性"探析

一般认为,在自然垄断产业中的竞争性业务领域中,应当放松管制,引入竞争,而网络部分的生产经营则依然是自然垄断的领域,政府在这一领域仍然要实行进入管制,限制竞争,以获取规模经济或范围经济带来的利益。本文认为,在自然垄断领域中是否应当保持进入管制政策,不能简单地按照传统的理论假设进行推论,而是要对有关产业管制的成本和收益进行实证分析。本文提出了应当在自然垄断领域内引入竞争的理论假说,并用电信产业的统计数据对这个假说的理论模型进行了验证。     

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

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.

     

基于风险管理的商业银行价值创造模式研究

商业银行是经营风险的企业。商业银行通过控制自身业务经营活动中的风险和主动为客户管理风险两个途径寻求建立持续竞争优势,进而创造价值。由此产生四种基本的价值创造模式：预控制、对冲操作、价值创新和重组模式。     

How do business groups’ small world networks effect diversification,innovation, and internationalization?

Small world networks which demonstrate better group cohesiveness have attracted much theoretical attention in enhancing performance and creativity in strategic management. Yet, empirical studies of the benefits that can accrue to business groups’ strategic or economic outcomes remain scarce in the business group literature. Conceptualizing the business group as an embedded group network, we investigate the previously untested role of a small world group structure on relationships with group (industrial) diversification, core firm innovation and its internationalization. We find all these have positive and significant impacts. Group diversification is also found to mediate the relationship between a small world group structure and a group’s degree of internationalization. However, a small world group structure does not directly relate to a group’s degree of internationalization. Drawing on embeddedness and social network perspectives, we find general support for the hypotheses that a small world group structure facilitates strategic and economic outcomes for groups and core firms by virtue of efficiencies in resources exchange in a way that extends the literature on business groups.     

The Paradox of Liberalization — Understanding Dualism and the Recovery of the German Political Economy

What do the recent trends in German economic development convey about the trajectory of change? Has liberalization prepared the German economy to deal with new challenges? What effects will liberalization have on the co‐ordinating capacities of economic institutions? This article argues that co‐ordination and liberalization are two sides of the same coin in the process of corporate restructuring in the face of economic shocks. Firms seek labour co‐operation in the face of tighter competitive pressures and exploit institutional advantages of co‐ordination. However, tighter co‐operation with core workers sharpened insider–outsider divisions and were built upon service sector cost cutting through liberalization. The combination of plant‐level restructuring and social policy change forms a trajectory of institutional adjustment of forming complementary economic segments which work under different rules. The process is driven by producer coalitions of export‐oriented firms and core workers’ representatives, rather than by firms per se.     

Business groups in developing capital markets: Towards a complementarity perspective

Prior research suggests that business groups (BGs) in developing economies have emerged as alternatives to poorly developed economic institutions in these countries. In this paper, we argue that this does not imply they are always substitutes. Specifically, we consider the case of capital markets, a key economic institution: while the absence of well‐developed capital markets may indeed have stimulated the emergence of business groups, we propose that BG affiliation and the scrutiny that maturing capital markets impose on firms that participate actively in them nevertheless can play a complementary role in influencing a firm's performance. We find support for our predictions in a novel longitudinal data set of Indian firms that contain both listed and unlisted BG affiliated as well as unaffiliated firms. Copyright © 2014 John Wiley & Sons, Ltd.     

Waking the sleeping beauty: Swarovski’s open innovation journey

Even in today’s turbulent business environment, there are companies in many industries that have enjoyed decades of relatively undisturbed success. However, eventually, after such prolonged periods of calm, existing market positions are challenged. We describe such companies as ‘Sleeping Beauties’ and discuss how they can reinvent themselves through opening up of their boundaries and moving from compartmentalized exploitation and exploration efforts to a more dynamic ambidexterity model. We analyse Swarovski’s open innovation journey in this regard, instigated as a response to recent changes in its business environment. Our analysis of this process offers useful insights for companies struggling with similar problems.