Central coordination and profitability in large Latin American business groups

This study analyzes the profitability effects of central coordination in large business groups in Latin America. By adopting a configurational approach, we analyze the profitability implications from a core entity involvement in the areas of strategy definition, talent management, values and culture management, stakeholder management, corporate branding and corporate innovation. Using Fuzzy Set Qualitative Comparative Analyses on a sample of 17 of the largest business groups in Latin America, we contribute by identifying core entity’s configurations that are causally linked with business group high financial performance, measured as the highest average ROE between 2014 and 2017. Specifically, we find that business groups with the highest performance include strategy definition, talent management, values and culture management activities as part of their core entity coordination as necessary conditions. We also find that the relevance of the fourth role, stakeholder management, is linked to the macroeconomic conditions of the countries where affiliates operate.